Section 1: Determining the Subject Matter to be Interpreted: Pg. 555-571
Parol Evidence Rule: Must have a written document. So, if agreement is ALL oral parol evidence rule does NOT apply
– Two types: (1) Partially integrated agreement
(2) Completely integrated agreement
– A partial agreement discharges prior agreements to the extent that it is inconsistent with them (or alters the terms of the current agreement). The court must determine if the oral agreement fall within the field or scope of the written contract. To be enforceable the oral agreement terms must naturally be separate (i.e. consistent with the written contract and so would not alter its expressed terms)
– A completely integrated is an “entire agreement” (i.e. might have a merger clause) and not even evidence of a consistent additional term is admissible to supplement the written agreement. R2d §210, §216 & UCC 2-202 Note that a merger clause might be held unconscionable.
– The parol evidence rule does not bar subsequent oral agreements. This could be true (depends on which state) even if the agreement includes a no-oral modification clause.
– An earlier oral agreement is NOT enforceable if it contradicts with the terms of a current written agreement. Evidence of prior negotiations/agreements is not admissible in evidence to contradict term(s) of the writing. R2d §209, §215 The Restatement admits evidence of oral agreement if the parties would naturally have made them as separate agreements from the contract. Evidence of oral agreements should be excluded when the fact finder would be misled (based on the credibility of evidence).
– Since the parol evidence rule proceeds on the assumption that there is a written agreement, it does not bar extrinsic evidence to show that the written agreement is not valid (i.e. fraud, was a joke, etc.)
UCC 2-202: Parol Evidence Rule
– Terms in the written (“final expression”) contract may not be contradicted by any evidence of prior oral agreements but may be explained or supplemented by (1) course of dealings/trade usage/course of performance and (2) evidence of consistent additional terms (unless court determines was intended by both parties as a complete and exclusive statement of all the terms)
– Such writing are read on the assumption that course of prior dealings and usage
erms appear to satisfy its goals, without any uncertainty, then the contract is presumed to be the complete agreement between the parties. The court must determine if the oral agreement falls within the scope of the written contract and if it does then it cannot be considered a separate agreement and the written contract will govern the parties’ relationship. However, if the oral agreement does not fall within the field of the written contract it may be considered a wholly separate contract. Is the subject matter of the two agreements so interrelated that they would normally be contained in a single contract? In this case, the terms in the written contract control Gianni’s ability to sell certain items in the store. These terms would naturally cover an agreement that granted exclusive right to sell soda, so cannot interpret the oral agreement as distinct (and thus would alter or conflict with those terms in the written contract).
