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Contracts II
University of Toledo School of Law
Tierney, James Edwin

Contracts II
Chapter 5
1. Parole Evidence Rule
a. Restatements 209 – 217 (209, 210, 215, 216)
b. UCC 1-303, 2-202
c. Oral or extrinsic evidence – if there is a writing, will other evidence apart from the writing be allowed. Acts to exclude / bar some evidence from being introduced
d. Judge decides if the agreement is integrated and to what degree
i. Integration (Res 209), a writing that expresse the final expression of the agreement
ii. If integrated is it a complete or partial integration? (Res 210)
1. Complete Integration (215)
a. Complete and exclusive statement of the terms
b. Evidence of contradictory additional terms are barred.
c. Evidence of consistent additional terms are barred
d. No other evidence prior to signing admitted
2. Partial (216)
a. Agreement less than a complete integration
b. Evidence of contradictory additional terms are barred
c. Evidence of consistent additional terms are allowed
iii. Modern view is to allow extrinsic evidence to be presented to judge (not jury) to establish if it is integrated and if it is complete or partial. Partial Integrated K – Past course of dealing and usage of trade are not verbal agreements and will always be included unless carefully negated by the parties (2-202 comment 2) (Also see note 5 pg 426).
e. Cases
i. Thompson v Libbey (381) Short sweet K for the sale of logs from D to P. K says nothing about type of logs or guarantee of type or quality of logs. Buyer refuses to pay because logs are not of correct quality.
1. Ct bars the buyer from giving oral testimony that here was agreement on type or quality of logs. The writing covers the transaction and it does not mention any guarantee.
2. Ct effectively says writing is a complete integration of the agreement and so additional terms are bared from being supported by anything outside of the actual writing – no oral testimony allowed.
ii. Taylor v State Farm (pg 392) T sues SF for bad faith claim – did not adequately defend and negotiate settlement with other parties. Defendant signs release claim.
1. Jury finds for T for total of 2.4 mil.
2. App ct. reversed based on parole evidence rule – look at the release only (no other evidence allowed) and must first show ambiguity on the face of document alone – then can offer evidence on meaning.
3. Supreme Ct reverses back to trial verdict and says you do not need to show ambiguity

and course of performance. Course of dealing is prior transactions (over last K). Old K had price protection and so course of dealings could support price protection argument. (UCC 1-303). K does not expressly exclude price protection and so the other elements course of performance, course of dealing, usage of trade is allowed to see if it is reasonable to think the parties could presume that price protection was included.
4. Prior dealings may have prior relationship details assumed for the new agreement unless expressly rejected in new agreement.
5. Parties actions under the agreement can be one of the best indications of what the agreement means (pg 421)
6. Discussion of damages 1-305, expectation interests – put in as good as a position if the contract would have been fully performed. (Pg 419). Amount based on orders in pipe line.
7. Also UCC 1-304 – Good Faith (def 1-201 (20)), Implied terms based on usage of trade – would lead to same conclusion.