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Contracts II
University of Toledo School of Law
Klein, James M.

Notes: 1/10/05

Overview

Interpretation
Legal Rules regarding Performance
Damages (a lot of time)
Excuses

This semester assumes that K has been formed

Parole Evidence Rule

Is there evidence/factors that cannot be examined?
If evidence exists, why can’t we look at it?

People tend to be self-serving regarding “stuff” outside of the writing.
If parties go to the trouble of putting a K in writing, they should be bound by the writing
This area of law is murky, and causes some confusion because there are several exceptions to the rule. (Think: Swiss cheese)

Restatement Sections:

§215 – Contradiction of Integrated Terms
If an “integration” exists, contemporaneous evidence is not binding
§216 – Consistent Additional Term
If there is only partial integration, additional terms that are supplementary can be included. If integration is complete the term cannot be included
§209 – Integrated Agreements (Df/n)
Parties agree to at least one aspect = integration
§210 – Complete/Partial Integration (Df/n)
If it looks “complete” is it, if not it is partial
*Any discussion that changes the agreement after the formation of the K may be admissible. Parole Evidence only applies to prior or contemporaneous facts.
*Any factors that are not contained in the writing do not create Parole Evidence problems.

Questions to ask regarding PER problems:

Is it prior or contemporaneous?

If no = Not a PER problem
Maybe “No Oral Modification Problem”
If yes (oral prior, written prior, oral contemporaneous) = Continue

Is it an integration?

Agreement one or more matters
§214(1) – Extrinsic evidence can be looked at in order to establish integration

i. Will establish whether or not parties were still negotiating
ii. If any agreement exists, an integration exists

If not an integration = Not a PER problem
If yes = Continue

Is the integration COMPLETE?

If yes:

i. Contradiction and supplementation are NOT allowed!

If no:

i. Supplementation is allowed
ii. Contradiction is NOT allowed

Completeness Test:

i. Is the writing intended as a complete, exclusive statement? (§210)

Intent:

i. Traditional Rule (4 Corners Rule)
1. When the writing on its face appears to be the complete discussion on the rights and obligations of both parties, it is a total integration unless the additional terms were such that the parties would naturally enter into a separate agreement regarding the additional terms (ie. collateral)
2. Examine the document itself to determine the length and breadth of the agreement.
3. If there is a blatant gap or ambiguity within the document, then you can look outside. Otherwise, if it is not in, tough
4. Collateral agreements are usually considered separate agreements if they would not naturally be included with the subject matter (Mitchell)
ii. Mitchell Collateral

e
3. Objective Theory applies
ii. Mistake
1. Must be mutual!
2. Evidence must clearly show the intention of both sides
iii. Condition Precedent to a K
1. This is difficult
2. We will return to this later
3. Problem 9 is an example of this situation
iv. Collateral Agreement
1. Subject matter must differ but be logical

Parole Evidence Rule & The UCC

“Old” §2-202 (p. 1193)

Terms set in writing, and
Agreement is final, then
No contradiction by:

i. Prior agreement
ii. Contemporaneous oral agreement

Supplemental is allowed by:

i. The triplets, or
ii. Consistent additional terms

If “merger” clause

i. No contradictions
ii. No explanations
iii. No supplementations

Except!

i. The triplets can explain if not carefully negated

01/19/05

UCC Questions to Ask:
1. Do the terms agree or otherwise appear to be final?
2. Is the term prior or contemporaneous oral?
a. Examine in terms of the triplets
3. Is it contradictory?
a. Typically written language will always win
Courts try to harmonize the triplets with the written language where possible