Contracts II Outline
I. Written Manifestations of Assent
A. Interpreting a Writing—The Parol Evidence Rule
a. Terms to be familiar with:
i. Parol Evidence Rule—the principle that a writing intended by the parties to be a final embodiment of their agreement cannot be modified by evidence of earlier or contemporaneous agreements that might alter the writing.
1. It only applies to earlier or contemporaneous evidence. It does not apply to subsequent agreements.
2. Policy motivations behind the rule: Avoid perjury and testimony based on slippery memory. It also motivates parties to put their complete agreement into writing.
ii. Integrated Agreement—a writing or writings constituting a final expression of one or more terms of an agreement (§209)
1. The court (judge) answers this question before attempting to apply the parol evidence rule
2. If the writing was not a final embodiment of the terms of the contract then the parol evidence rule does not apply.
iii. Completely Integrated Agreement—an integrated agreement adopted by the parties as a complete and exclusive statement of the terms of the agreement (§210)
1. The writing is both final embodiment of the terms and complete
2. Again, this determination is made before applying the parol evidence rule.
b. When dealing with additional terms: Is the written agreement intended to be the “final expression” of the parties’ agreement regarding a transaction? [Integrated agreement]
i. If so, extrinsic evidence of inconsistent prior agreements (both written and oral) may not be introduced. §213
ii. If not, extrinsic evidence of inconsistent prior agreements (both written and oral) may be admissible.
iii. Ex. Thompson—the court found the contract for sale of logs to be completely integrated with respect to the sale of logs. (always have to say with respect to what
iv. Brown: The court found the sale of land was not completely integrated with respect to the sale of land, so extrinsic evidence is allowed.
v. Exam Tip: Look at the intent of the parties and explain that intent
c. When dealing with additional terms: Is written agreement intended to be the “final expression” of the parties agreement AND a “Complete and exclusive statement of the terms of the agreement?” [a completely integrated agreement]
i. If so, extrinsic evidence may not be used to prove additional terms (even if they are consistent with the writing)
ii. If not, extrinsic evidence may not be used to prove additional terms that are consistent with the writing. §216
Two Main instances where you can introduce Extrinsic Evidence:
1. To prove additional or different terms (Brown and Thompson)
a. Traditional/Williston Approach: If a contract is completely integrated, evidence of consistent or inconsistent additional terms is prohibit
ies as a final expression of their agreement with respect to such terms as are included therein may not be contradicted by evidence of any prior agreement or of a contemporaneous oral agreement but may be explained or supplemented
1. (a) by course of dealing or usage of trade (§1-205) or by course of performance (§2-208) and
2. (b) by evidence of consistent additional terms unless the court finds the writing to have been intended also as a complete and exclusive statement of the terms of the agreement
ii. So, integration v. complete integration matters under the UCC. You cannot introduce additional terms if the agreement is completely integrated and you can always introduce evidence of meaning under the UCC (like Restatement)
f. Merger clause—a clause that states that the writing is a final, complete and exclusive statement of all the terms agreed on. Under the traditional approach, a merger clause would resolve the issue of complete integration. This is probably still the majority rule, though some courts will say that a merger clause is only one factor in determining whether a writing was an integration.
Partial Integration—a partial integration is controlling on those subjects that it covers, but it does not bar parol evidence on subjects that it does not cover. So always ask integrated with respect to what.
