CONTRACTS 2 DUBOSE 2018
PAROL EVIDENCE RULE
The Parol Evidence Rule (PER) is a rule of exclusion designed to exclude evidence of prior agreements or negotiations that are not included in the written contract. The parol evidence rule is a shield or bar to allowing outside agreements or negotiations to affect the written contract.
Is an affirmative Defense; exclusionary rule.
Matter of law that is decided by the judge at pretrial evidentiary hearing.
There are 2 areas of PER 1. Integration & 2. Interpretation
INTEGRATION – This is a determination of whether the prior agreements or negotiations not evidenced in the written contract become a part of the obligations of the contracting parties. If the court determines that the contract is totally integrated, then the prior agreements or negotiations do not come in.
3 Preliminary Integration Questions These questions is where the tricks are and exceptions to the PER.
-Does it (evidence) contradict anything in the contract? Only consistent statements come in.
If Yes then No (If contradicts Not allowed in)
-Is it a condition to the formation of a contract? I will buy the house only if it passes inspection. This always goes in before the court.
If Yes then Yes (Conditions always allowed in)
Pym v. Campbell (invention/late case)
RULE: An oral Condition precedent to the condition to the existence of a written K may be admitted under PER and MUST be satisfied prior to the performance of the K
-Is it subsequent to the writing? The parol evidence rule allows statements made prior to or contemporaneous with the contract.
If Yes then No (Does not come)
If you get through the exceptions, then determine if the contract is totally integrated. If it is not totally integrated, then the court will use one of the following theories as the basis for integrating the information into the contract.
6 Theories of how to integrate things
1. 4 Corner’s Test: The Judge will look only within the 4 corners of the document. If the Judge finds that the writing is complete on its face then it is totally integrated. This theory is on the decline.
Very conservative view
Eichengreen v. Rollins, Inc. (fire detector/alarm case)
RULE: Where a written agreement is the final and complete expression of the parties, intent and extrinsic evidence regarding the intent of one of the parties does not become a part of the K.
2. Collateral Contract Concept: The Judge will ask three questions before allowing in parol terms:
-Is the other agreement (in form) collateral?
Does it support, further explain, clarify, or supplement the written K
-Does it contradict an express or implied provision of the writing?
-Would it be one the parties would “ordinarily” have included in the writing?
If so, and they didn’t put it in that means they didn’t want it in.
*This theory is not widely accepted due to the limited information provided, but it is still alive.
3. Williston’s view: Reasonable person approach-
-Merger Clause: If a merger integration clause exists (e.g. “This writing contains all the terms of the agreement of the parties”), presume integration is TOTAL, unless merger integration clause obtained by fraud, mistake, etc.
Merger Clause is where all terms are in this paper and we will not veer from this paper.
Mostly used
Ties both parties hands; not always the best bc it locks both parties down
If there is a merger clause its TOTALLY integrated; If none its PARTIALLY integrated
-If there is no merger integration clause, ask: Would it have been “natural” for the parties to have included the term in the writing? If yes = total integration; if no = partial integration. Ask this question for each proffered consistent, additional term. Contra to case book, with respect to the parol evidence rule (vs. integration), Williston rejected “Four Corners” and “Collateral Contract” as unworkable.
Mitchill v. Lath (Ice house case)
RULE: An oral agreement is permitted to vary a written K only if there is no Merger Clause and it would not have naturally been included in the K.
Lee v. Seagram & Sons (Liquor case)
RULE: A corporate written agreement to sell a distributorship from an individual back to the corporation would not naturally include a contemporaneous agreement regarding future employment, therefore the PER would not bar the introduction of oral agreement.
4. Corbin’s View: Look to true intention of the parties and allow judge to look at ALL relevant, extrinsic evidence. It’s clear that Corbin’s view undercuts the parol evidence rule, and some say is current trend.
5. UCC 2-202: Presumption of partial integration unless the judge determines that the writing was intended to be a complete and conclusive statement of all the terms of the contract (i.e. a total integration). The test here is whether the parties would have “certainly” included the term in the writing. If the answer is “yes”, the writing is deemed to be a total integration. In addition, note that whether the writing is deemed to be a partial or total integration, it may always be explained or supplemented by course of performance course of dealing, or usage of trade.
UCC always assume K are partially integrated (we make allowances for sale of goods)
Course of performance- One K, Course of dealing- one K w/ multiple parts, usage trade- how do others w/ similar K handle this
Luria Bros v. Pielet Bros Scrap Iron (Scrap Iron case)
RULE: if a written K for the sale of goods contains no conditions, a requirement that the goods come from a specific source is a significant condition and would have “certainly” been included in the writing, thus the PER would exclude the condition from the agreement.
6. Restatement II: It’s a mixture of Rest I, UCC and Corbin. Would the parties regard all the terms as being complete? Is the subject of the parol term within the scope? If so, the parol evidence is not coming in. Many courts use this view. NOT TESTTED!
INTERPRETATION – If the court determines that the prior agreements or negotiations are integrated into the contract, then what do they mean? How are they interpreted?
Once allowed in “what does it mean?”
*NOTE: If interpretation of an i
ural Essence products.) = LIABILITY- damages but they must be certain
Court like promises because if you break then you do get damages.
Jones Associates v. Eastside Properties (paid upon building plan approval case)
RULE: Courts will seek to find a promise not a condition when the happening of the condition is not within the control of the part, especially when the party has worked in good faith.
CONDITIONS PRECEDENT & CONDITIONS SUBSEQUENT:
A condition can have one of two effects: it could activate a duty. Or, it might discharge a duty.
Condition Precedent: a condition (fact or event other then the mere passage of time) that activates the duty or promise (puts you in having to do something)
Activate: before that act or event occurs, you have no obligation to perform.
ie: You must file a claim with the insurance company within 10 days of an incident.
–Without the 10-day notice, the insurance company has no duty to pay.
Bright v. Ganas (Servant want to eat boss wife case)
RULE: Where there is an implied condition precedent in a K for an employee to demonstrate good faith in preforming his duties, failure to perform as such will cause the court as a matter of law to force a forfeiture of the K.
Condition Subsequent: a condition (fact or event other then the mere passage of time) that discharges the duty. (takes you off the hook )
Discharge: discharges the duty
ie: If you do not complete your insurance claim within one year of filing, the insurance company has no duty to pay.
–Says to the insurance company, you do not have to pay any more.
Gray v. Gardner (more oil by certain time price drop case)
RULE: The party seeking to escape a condition subsequent has the burden of proving whether or not the condition has occurred.
Now, precedent and subsequent have NOTHING to do with WHEN the fact or event occurs. They are descriptive of the effect of the duty.
Concurrent conditions: have nothing to do with the “fact or event.” They involve a bilateral contract (2 promises) in which the parties have not ordered performance. Instead, the promises are simultaneous- or, we don’t know who is supposed to go first.
ie: I promise I will sell you my car for $400. I promise to buy your car for $400.
Kingston v. Preston (silk business trying to sue with no security)
RULE: Where an arrangement does not order performance and the intent of the parties is that one performance depends on the other, the court will defend which performance is a conditional precedent.
