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Contracts II
University of Mississippi School of Law
Bradley, John R.

CONTRACTS II
Professor Bradley, Section 1
Spring 2012

I.  PAROL EVIDENCE RULE

1.      A writing intended by the parties to be a final embodiment of their agreement CANNOT be modified by added evidence that varies/contradicts.
2.      If there is a binding agreement that’s either completely or partially integrated, evidence of prior agreements or negotiations is NOT admissible to contradict a term of the writing.

3.      Policy
a.       Favors written over oral b/c issues of credibility of evidence/proof.
b.      Usually later, written agreement is a clearer expression of intent than an earlier oral agreement.

4.      Integrated Agreement – writing constituting final expression of parties’ intent as to one or more terms.
a.       Complete
i.      Final, complete expression of one or more terms.
ii.      End of negotiations on certain topics.
iii.      PER applies – cannot be contradicted or supplemented.
b.      Partial
i.      Cannot be contradicted by PE, but may be supplemented by evidence of additional terms that are consistent w/ the original agreement.
ii.      Intended to be final, but not complete b/c deals w/ some, but not all aspects of the transaction.
c.       Not Integrated
i.      Not final, still under negotiation.
ii.      PER doesn’t apply, so parol evidence is allowed.
d.      Judge determines if not integrated or complete/partial.

5.      If there’s a binding agreement, either partially or completely integrated, evidence of prior agreements/negotiations NOT admissible to contradict a term.

6.      Williston View (classic, formal approach)
a.       A lot of weight to the written document b/c it tells us what we need to know.
b.      Tentative promises made in earlier negotiations are irrelevant.
c.       The very fact that they adopted a writing means the intent is to be a superseding statement of their agreement.
d.      If K is integrated (partial or complete), no parol evidence inadmissible.
e.       Court uses Williston’s 4-Corner approach to det. If it’s integrated.

7.      Corbin View (modern, individualized approach)
a.       Must find what the parties intended, looking at document alone not enough.
b.      All relevant evidence of intent should be considered.
c.       Judge looks at all extrinsic evidence to determine if it’s integrated.
i.      If partial, evidence allowed to supplement/interpret, but can’t contradict.
ii.      If complete, evidence allowed to interpret only (and still can’t contradict).
d.      UCC and R take this view.

8.      Process
a.       (1) – Must have an oral agreement and a subsequent written agreement.
b.      (2) – Did the parties intend #2 to be binding?
i.      Evidence allowed to determine if binding (lack of consideration, fraud, mistake, illegality, unconscionability, etc.)
ii.      Usually yes, intended to be binding, and PER applies.
iii.      If not intended to be binding, PER not applicable, so evidence is allowed.
c.       (3) – Is #2 intended to be integrated?
i.      Can present evidence showing not meant to be integrated.
ii.      RS – the judge decides this.
iii.      K must be integrated for PER to apply.
d.      (4) – Contradiction?
i.      Judge hears evidence to determine if #1 is inconsistent w/ #2.
ii.      If inconsistent or contradicts an integrated agreement/term, PER applies to keep evidence out.
e.       (5) – Is #2 completely integrated?
i.      RS – If the agreement/term is integrated, clear, and unambiguous, then there’s total integration, and parol evidence is kept out.
1.      Evidence regarding ambiguous terms may be let in.
f.        (6) – Is #1 within the scope of #2?
i.      Scope – clearly connected w/ the principal transaction.
ii.      If it would have normally been left out (outside scope), parties could have intended both agreements to exist side by side (collateral K doctrine).
iii.      Within scope, evidence precluded.
iv.      Outside scope, evidence allowed.

9.      A binding and integrated agreement discharges prior agreements to the extent they are inconsistent and within its scope.

10.  Even if parol evidence is allowed, it doesn’t decide the merits of the case. Jury still decides the credibility of P’s claim and determines if agrees w/ evidence or not.

11.  Exceptions to PER
a.       Binding – evidence showing it’s voidable is allowed (illegality, fraud, duress, mistake, lack of consideration, etc.).
b.      Separate consideration – parol agreement admitted if supported w/ separate consideration.
c.       Writing never intended to be operative – parol evidence admissible.
d.      Collateral Contract Doctrine
i.      Evidence permitted to show #1 was a separate agreement.
ii.      Did parties intend #2 to wipe out all prior agreements? Look at surrounding circumstances to determine intent. If parties intended both agreements to exist, then ok.
iii.      Permit proof of collateral agreement that might naturally be made as a separate agreement by the parties.
iv.      Let evidence in of collateral contract unless it will mislead judge/jury.
e.       Condition Precedent
i.      Evidence allowed if writing depends on happening of event.

                                      iv.      UCC – writing may NOT be contradicted by evidence of prior agreement, but may be explained/supplemented by evidence of consistent additional terms.
v.      Corbin-like Reasoning – cannot tell from the writing what the parties meant, must look to all relevant evidence on the meaning of the term.
vi.      Way Around PER? – try to prove agreement/term is ambiguous and offer evidence showing the proper interpretation to help your view.
d.      Modern Trend – As long as the term is reasonably susceptible to alternative meanings, ALL credible evidence should be admitted.

16.  UCC – a final expression may NOT be contradicted by evidence of a prior agreement (PRE), but may be explained/supplemented by course of performance, course of dealing, usage of trade, and evidence of consistent additional terms.

17.  Interpreting Intent – Trade Usage, Course of Performance, Course of Dealing
a.       UCC – writing may NOT be contradicted by evidence of a prior agreement, but may be explained/supplemented by course of performance, course of dealing, and usage of trade.
b.      Habit or customary practice will normally govern in an agreement unless the parties made it expressly clear that different rules will govern.
i.      Evidence is admitted, even if writing is fully integrated, unless the parties express different rules apply.

c.       An agreement is interpreted in accordance w/ relevant usage IF
i.      Each party knew or had reason to know of the usage, AND
ii.      Neither party knew or had reason to know the other attached a meaning inconsistent w/ the usage.
d.      Question of Fact if there was a trade usage or if it was a justifiable expectation.
18.   A question of interpretation is a question of fact.
a.       Must determine the credibility of the evidence or chose among reasonable inferences that can be drawn from evidence.
b.      If evidence can mean only one thing, it’s a question of law.
II.  FORM CONTRACTS
1.      Mirror Image Rule (Common Law)
a.       Two forms must be a mirror image (identical) to each other to be an acceptance. If not, it’s a counteroffer.

2.      Battle of Forms
a.       Resulted from Mirror Image Rule.
b.      Party would create K w/ favorable terms for them, other party would respond w/ differing terms, and the party w/ the “last shot” prevailed.