CONTRACTS II: Pasman-Green
CHAPTER 5: PAROL EVIDENCE
I. PAROL EVIDENCE RULE
A. MEANING OF PAROL EVIDENCE
1. Parol Evidence: includes evidence of oral or written agreements or negotiations that are PRIOR to or contemporaneous with a writing intended to be the complete or partial integration of the parties’ final agreement.
a. The parol agreement must have been made BEFORE the contract was entered into
i. If the agreement was made after the contract was entered into, it is not parol evidence, and is subject to contract modification rules of the UCC
b. There must have been a written contract in order to apply the parol evidence rule
B. INTEGRATION:
1. Partial Integration: the document is intended to be the final agreement between the parties, BUT IS NOT intended by the parties to include all details of their agreement
2. Total integration: the document is intended by the parties to be the final agreement between the parties and is intended to include all of the details of their agreement
a. Any parol evidence is superseded by the written document
b. CANNOT BE SUPPLEMENTED OR CONTRADICTED BY PAROL EVIDENCE
3. Collateral agreement: a separate oral agreement supported by separate consideration
a. Can be added to the written document if supplements the written agreement and would have naturally been omitted from the writing
4. Burden of proof:
a. COMMON LAW: assumed that the written contract was a fully integrated contract
i. The burden of proof is on the party attempting to prove that the contract was only partially integrated (i.e. parol evidence should be allowed)
b. UCC: assumes that the written contract is a partially integrated contract
i. The burden of proof is on the party attempting to prove that the contract was fully integrated (i.e. no parol evidence should be allowed)
5. TESTS OF INTEGRATION: courts use different tests to determine the extent of integration of the written contract:
a. Four Corners Test: (MAJORITY): based on the terms included within the four corners of the contract document itself, the JUDGE uses his own knowledge and opinions to determine whether or not the parties have drafted an agreement that is complete enough (i.e. includes all of the essential terms) to be considered fully integrated
i. If the K is determined to be partially integrated the ONLY parol evidence that will be allowed is evidence that:
(a) Supplement the writing
(1) Course of dealings
(2) Trade usage
(3) Course of performance
b. Corbin: The actual INTENT of the parties should be looked to in determining the integration of the written agreement. If the evidence introduced by the parties show that they did NOT intend the written contract to contain all terms of their agreement, and that in fact other oral agreements were made and were intended to be binding, then the evidence would be allowed to be heard by the jury. (i.e. either the parties didn’t intend for the written contract to be a complete integration, OR the parties intended the contrac
the writing is unclear and ambiguous, then the writing as a whole (within the four corners) should be examined to determine its completeness,
(a) and will be treated is a PARTIAL INTEGRATION if the writing:
(1) is obviously incomplete on its face (i.e. a lease with no mention of price)
(2) expresses the duty of only one of the parties (as is the case with deeds, promissory notes, etc)
(b) If the writing is determined to be a partial integration, then additional terms may be demonstrated through oral evidence.
d. UCC: (not a test, but rather a guideline) There is a presumption of a partially integrated contract
i. Evidence of consistent additional terms may be given unless the court finds that the writing was intended as a complete and exclusive statement of the agreement (i.e. complete integration)
ii. If the additional terms are such that, if agreed upon, they would CERTAINLY have been included in the document in the view of the judge, then evidence of their alleged making must be kept from the jury. (i.e. the court has determined that the contract is fully integrated)
Excludes evidence ONLY if it would CERTAINLY have been part of the writing if the parties had agreed to it. (more lenient than the other tests)
