I. Parol Evidence Rule (PER)
Definition: a writing intended by the parties to be the final written statement of their agreement (integrated) may not be contradicted by prior or contemporaneous statements, agreements, negotiations, etc – whether oral or written.
[ PER will not allow other evidences not included in the writing because if the parties entered into a K and put the agreement in writing, that agreement is sacred. PER is an exclusionary rule.]
If the writing is final AND is the complete written expression of the parties, a total or complete integration exists and the writing not only may not be contradicted by extrinsic evidence, it may not even be supplemented by consistent, additional terms.
If the writing is final BUT is NOT the complete written expression of the parties, a partial integration exists and although it may not be contradicted, it may be supplemented by extrinsic evidence (oral or written)—that is by consistent additional terms
Possible situations
i. There is an unintegrated writing (no final written statement of the parties): PER does not apply at all
ii. There is a partially integrated writing
iii. There is a totally integrated writing
Exceptions: PER does not apply to or exclude the following information (the evidence is admissible):
1) Evidence on whether the writing is integrated. Judge considers all relevant evidence to determine whether the writing is final statement of the parties (integrated).
2) Statements/agreements subsequent to the writing;
3) Evidence to interpret a writing;
4) Evidence to show that a condition to formation of contract exists;
5) Evidence to show matters of avoidance exist, e.g., fraud, duress, mistake, etc.
6 Tests to determine if the integrated writing is TOTAL or PARTIAL
Total: every term of the K is in the writing
Partial: every term of the K is not in the writing
1) “Four-Corners Rue” – If solely looking at the document, the judge finds that the writing on its face is complete, the writing is totally integrated. (theory in decline)
2) “Collateral Contract” Concept – Before allowing extrinsic evidence to prove there was another agreement to supplement the writing, ask:
a. Is the other agreement in form collateral?
b. Does it contradict an express/implied provision of the writing?
c. Would it be one the parties would “ordinarily” have included in the writing?
Theory in decline but still alive
3) Williston’s View
a. Assume that the integration is total unless integration clause obtained by fraud, mistake, etc.
b. Ask: Would it have been “natural” for the parties to have included the term in the writing? If yes, there is total integration. If no, partial integration.
Ask this question for each proffered additional, consistent term
Do not look the actual intent of the parties, intent
parties ordinarily would not be expected that the oral agreement would be into the sale K because it was a corporate sale of assets and there was a close relationship between the parties that it wouldn’t be surprising that a handshake would have been thought sufficient.
Luria Bros v. Pielet: Luria and Pielet had an oral agreement to buy/sell scrap metal from a certain source. But the written K was unconditional sale of goods. The court held that UCC applied here and everything can come in but not an inconsistent one. The court held that there was an inconsistency: absence of reasonable harmony in terms of the language and respective obligations of the parties. The inconsistency is that the written agreement is for an unconditional sale of goods, but the parol evidence is that the seller’s obligation was conditioned upon receiving the goods from a particular supplier
Pym v. Campbell: The parties conditioned the sale of an invention to the approval of 2 experts, but for convenience they signed a written K. One of the experts did not approve. The court held that there was never any agreement at all because the parties signed the paper on the condition that it was to be an agreement if Abernethie approved the invention.
