Contracts II Outline

Contracts II Outline
Prof. Kearney- Spring 2012
 
 
Definitions:
Parol Evidence Rule
1.      Even if a court allows such evidence, its veracity still has to be proved to the jury.
2.      The rule controls only what type of evidence is allowed, not credibility
3.      The rule comes into play only when one party is attempting to influence the legal effect of a written document by offering extrinsic evidence to supplement (add to) or interpret (explain) its stated terms.
 
Extrinsic Evidence
1.      Evidence not contained in the writing (agreement)
a.       Prior agreements – Oral or written communications relating to the same subject of the writing that were signed or communicated prior to the execution of the writing.
 Integration
1.      A writing is integrated if it is adopted by the parties as “a final expression of one or more of the terms of an agreement.” (Rest. 2d §209(1).)
2.      Partially integrated: if the parties DID NOT intend for it to include ALL the terms of the agreement.
3.      Completely integrated: if the parties DID intend for it to include ALL the terms of the agreement. (Rest. 2d §210(1).)
 
When PER is admissible?
1.      Extrinsic evidence will not be admissible to contradict terms of any integration.
2.      If found to be an integration, total or partial, extrinsic evidence it CANNOT contradict terms.
3.      Evidence of prior agreements or negotiations may supplement a PARTIALLY integrated agreement, provided this evidence does not contradict a term of the writing.
4.      When an agreement is COMPLETELY integrated, not even evidence of a consistent additional term is admissible to explain or supplement it. (See below-Rest. 2d §216.)
 
§ 216 Consistent Additional Terms
1.      Evidence of a consistent additional term is admissible to supplement an integrated agreement UNLESS the court finds that the agreement was completely integrated.
2.      An agreement is NOT completely integrated IF the writing omits a consistent additional agreed term which is:
a.       Agreed to for separate consideration
b.      OR such a term as in the circumstances might naturally be omitted from the writing.
 
Collateral Agreement – If the agreement might naturally be left out of the writing even though truly agreed to by the parties, the agreement is “collateral” and evidence of it may be introduced in spite of the written contracts apparent completeness.
 
 
 
Parol Evidence
 
Must have written contract first to have parole evidence issue!
1.      Extrinsic Evidence
a.       Oral (Verbal)
b.      Written (E-mail, Text Messages, Letters)
2.      Timing
a.       When does this communication take place?
                                                        i.Prior to Agreement
                                                      ii.Contemporaneous with Agreement
1.      Policy: Communication should happen prior to signing of the agreement in order to prevent fraud from occurring. We want people to finalize their negotiations before a contract can be enforced because this will prevent fraud. (Fairness Argument)
3.      Language
a.       Is it fully integrated?
                                                              i.      Yes, then parole evidence doesn’t come in
                                                            ii.      Look at the following questions
b.      Is there Merger Clause (Betaco)
                                                              i.      No, full blown parole evidence issue
                                                            ii.      Yes, its not dispositive, look at other things.
1.      Language- does it suggest that something left to be determined
2.      CAPITAL LETTERS
3.      Location
4.      Size
5.      Layout in comparison to everything else (Court will not weigh that heavily)
c.        Is there a collateral agreement?
 
4.      Intent
                                      i.            Figuring out whether it comes in
                                                       a.            Intent
                                                                          i.             Complete Integrated Intent-
                                                                                          1. final and compete statement of the deal
                                                                                          2.Intended to contain all of terms of the agreement
                                                                                          3. Extrinsic info does not come in
                                                                                          4.Policy: Administrability- if it is not apart of the written contract, then things not included in it should not be allowed. Undermines legitimacy of contracts to allow extrinsic info in.
                                                                        ii.            Partially Integrated-
                                                                                          1. Final statement of our intent , but is not a complete statement of their whole agreement
                                                                                          2. Prior to signing agreement, may come in
                                                                                          3.Policy: New term not written may have caused the person to sign the agreement; without the new term they may not have entered into the contract
                                                                      iii.            Not Integrated
                                                                                          1.It is possible to add terms in after signing and they do come in
Corbin Approach: (Totality of the Surrounding Circumstances)
1.      Words and actions of the parties
2.      Is there an integration clause or a merger clause?
a.       Presence- may show intent that written agreement was meant to be the only agreement
                                                                                                                          i.      Is not automatically fully integrated, it is just a factor the court will look at
b.      Absence- may show that the parties did not i