What information we are allowed to look at when interpretating a contract.
– Parole evidence rule
– a.memoralizing that agreement they expect that document outlines their rights and responsibilities not outside sources.
– b. predictability is extremely important (parties need to know if they say x that means something).
– Not a question of an agreement there was one, parole evidence rule is a substantive one of law. Not just an evidence rule.
Notes (parol evidence)
– Start off by looking at section 209, 210, 215, and 216. (all on Sheet 1).
– Partial(can be used to supplement the agreement can’t contradict) vs Complete (can not use outside information for prior terms).
– Two questions
– 1. does it contradict
– 2. is the agreement complete or not
B. Common Law PER (parol evidence rule) questions to ask:
1. is the term prior (written or oral) or contemporaneous (oral); if so, potential PER problem (ie potentially inadmissible per PER). See rest 213
2. if so, is it an integration (intended to be final)? (agreement on atleast one term) (reduing a draft no deal to protect) (214(a)).
3. If so, is it complete? Test:
1. Traditional: Look at the document itself (4 corners of the document), does it appear on its face to be complete (complete if the term had the parties agreeded to it would have included it). 4 corners rule: where the writing on its face appears to be the complete discussion of the rights and obligation of both parties, it is a complete integration unless the additional terms were such that the parties would naturally enter into a separate agreement regarding the additional terms. (clear gap or mess up)
2. Modern: Intention of the parties in light of the writing and surrounding circumstances. Consider:
1. writing, merger clause, other language?
2. Useage of trade, course of dealing, or course of preformance
3. nature of transaction
If complete, term excluded. If not:
4. Does the term contradict the writing?
– if yes per prohibited (exclude)
– if no per allows admission (not exclude)
5. Do any exceptions apply?
a. sham/fraud- (pg. 345) lender who advances funds, makes up a lease to gain additional money and never intended to do this. (never intended to have a deal at all)
b. mistake- intend for a term to included but forget to put it in. Ex. Deal where defendants come in and take out minerals of land. When ur done put the top soil back. Defendants did that and read the contract and realized the term was not in so stopped doing it.
c. CP to K- condition precedent to a contract
d. Collateral- off to side unrelated
– 214 modern parol evidence rule, lets more things in.
– 214(a) may use parol evidence to establish that it is or is not integrated (judge can look at external evidence to look at the deal to see if there is an integration).
– 214(b) (modern) may look at negotiations to determine if it is complete or not
– said they would take down the ice house but never did it.
– Issue is not abou
– Columbia v. Royster- want to get in useage of trade and course of past dealings. Columbia is trying to say in our trade 31,000 tons means whatever we feel like buying. When you talk about custom your talking about useage of trade. Contract does not say anything about course of dealing, silent about decling market, default clause only talked about if you don’t pay (not about not accepting the tonnage), products supplied under contract instead of products purchased
– court will look at a document it will try to if it wants to bring it in, even though it changes things it does not totally negate it. Was really a complete contract there was a merger clause.
– Ex. Splash City you go to lazy river don’t have to work hard, but if you want to go the other way you have to work hard. Like negotiations of Royster and Columbia they were going along but didnt work hard enough to make it clear. Presumption that everyone is going downt he lazy river, if you want to go against that you have to make it very clear.
– Why did they let this stuff in? Terms do not contradict, is the agreement complete? (merger clause very good evidence it is complete)
UCC trade usage etc what the parties understand, directly goes to the intent of the parties contracting. Continue to think what you have though in the past (lazy river) unless clearly changed.