Contracts II Outline

CONTRACTS II CARRIER SPRING 2017
INTEGRATION
The Parol Evidence Rule
Definition: Once the parties have reduced their agreement to a writing that they intend to contain the final and complete statement of their agreement, neither party may introduce evidence that contradicts or supplements the terms of that agreement.
The judge makes the decision to allow parol evidence instead of the jury.
“The parol evidence rule is not a rule of evidence, but of substantive law. Its applicability is for the court to determine, and, when the result is reached it is a conclusion of substantive law.”
Why does this go to the judge and not to the jury?
It’s a court of equity issue, which is decided by the court (the judge).
Two new forms of equitable remedies:
Rescission
Reformation of a Contract
Four questions about the parol evidence rule to ask in regards to overruling it:
What is it that a party is offering to prove?
For what purpose is the evidence offered?
Did the parties intend the writing to contain the final and complete statement of their agreement?
Does the offered evidence contradict or supplement the writing?
 
The focus: defining the parties’ agreement to determine their contractual obligations. There are two steps:
Setting the boundaries of the agreement, which requires exploration of the parol evidence rule.
The courts determining whether to allow other forms as evidence to supplement a contract, making it more complete.
Determining the “meaning” of the parties’ “agreement”, which leads to the resolution of the meaning of the written contract though the process of interpretation.
Meaning of “Parol Evidence”
If the parties have taken the time and trouble to reduce their agreement to a writing, our law presumes that they have integrated into that writing all matters, written or oral, that occurred prior to the signing of the writing and will not allow in evidence to the contrary.
Parol evidence is generally assumed to include 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.
EXCEPTIONS to the Parol Evidence Rule:
Restatement Second of Contracts: s.213 Effect of Integrated Agreement on Prior Agreements (Parol Evidence Rule)
A binding integrated agreement discharges prior agreements to the extent that it is inconsistent with them.
(Applies to prior or contemporaneous oral agreements, NOT subsequent.)
A binding completely integrated agreement discharges prior agreements to the extent that they are within its scope…
(Collateral agreement rule)
UCC 2-202 – pretty much the same as the restatement with the addition of usage of trade, course of performance/dealings, and additional terms.
Terms with respect to which the confirmatory memoranda of the parties agree or which are otherwise set forth any writing intended by the parties as a final expression of their agreement with respect to such terms as are included therein may not be contradicted by evidence of any prior agreement or of a contemporaneous oral agreement but may be explained or supplemented:
By course of dealing or usage of trade (Section 1-205) or by course of performance (Section 2-208); and
By evidence of consistent additional terms unless the court finds the writing to have been intended also as a complete and exclusive statement of the terms of the agreement.
Elements to Consider Admitting Parol Evidence:
At least three conditions must exist for an oral agreement to be considered:
The agreement must be in form a collateral one,
It must not contradict express or implied provisions of the written contract, and
It must be one that parties would not ordinarily be expected to embody in 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.
The exception to the parol evidence rule discussed and Mitchill is commonly called the “collateral matter” exception, allowing in evidence of side agreements as long as there is a reasonable explanation as to why these agreements might have been omitted from the writing. In a sale of goods, UCC 2–202 calls these agreements “consistent additional terms.”
The Four Corner’s Test – Williston
Examine only the document itself. Look for a merger clause. Then look to the rest of the writing. If it is obviously incomplete, then it is only partially integrated. If it appears to be a complete expression of the rights and duties of both parties, then it is total integration (unless the oral terms were such that would naturally be made as a separate agreement by a reasonable person in the position of the parties. (Williston’s test is objective (reasonable person) in nature.)
Utilized in the Mitchill Ice House case.
The Corbin view on Parol Evidence: Looks at available evidence to determine the actual intention of the parties. Later agreements cancel prior ones if so intended by the parties.
Merger Clause:
If integration is determined by intent of the parties, a statement by the parties of their intent in the writing should go a long way toward establishing that intent and avoiding arguments about alleged collateral matters.
The Restatement Second drafters have stated that a merger clause should generally not be conclusive in most contexts; see comment e to s.216. However, the failure to include a merger clause does not necessarily mean that the parties did not intend an integrated agreement.
Inconsistency:
Narrow View: Inconsistency, defined as used in UCC 2–202(b): The absence of reasonable harmony in terms of the language and perspective obligations of the parties.
Broad View: Evidence of an oral condition precedent did not contradict the terms of a written stock option which was unconditional on its face. Therefore, evid