Contracts II - Parol Evidence Rule - Part I ADDING

R2d 213 - Effect of Integrated Agreement on Prior Agreements

1) A binding integrated agreement discharges prior inconsistent agreements. a) If only partially integrated, can present evidence of additional, consistent terms. Masterson 2) A binding completely integrated agreement discharges all prior agreements within its scope - even consistent ones. Gianni

UCC 2-202 - Very similar to Restatement formulation of the rule.

1) A completely integrated contract cannot be contradicted or supplemented (2-202(b)). However in UCC, court starts with presumption of partial integration. a) Partially integrated contracts may be explained or supplemented but not contradicted. 2) Also, may always use course of performance, course of dealing or trade usage to explain or supplement a deal (but never to contradict).

R2d 216 - Consistent Additional Terms

1) Evidence of a consistent additional term is admissible unless the court finds the agreement to be completely integrated. Masterson a) Courts will generally not use a legal presumption as a contradictory term unless dealing with parties who are aware of the presumption. 2) An agreement is not completely integrated if the writing omits a consistent additional term which is: a) agreed for separate consideration, or b) a term that in the circumstances might naturally be omitted from the writing. Masterson

R2d 209 - Integrated Agreements

1) Integrated agreement is a final expression of one or more terms. 2) The court must first determine if there is a writing, and if the writing is an integrated agreement before interpreting or applying the parol evidence rule. 3) Presume an integrated agreement when it appears reasonable to do so unless other evidence establishes that the agreement was not a final expression.

Rule #3: Merger Clause

A clause saying no promises or agreements except those contained in the writing.

Exception #2: No Agreement or Invalid Agreement

Courts do not apply the rule to evidence there was no agreement or that the agreement was invalid - e.g. no consideration - or voidable b/c of mistake, misrepresentation, duress, fraud, etc. R2d 214

Exception #1: Ambiguity in Writing

Interpret an ambiguity in the writing - for clarification. R2d 214

Rule #4: No Oral Modification Clauses

Many courts will not enforce the NOM clause of an agreement even where the written contract prohibits subsequent oral modifications. Parties are generally free to modify their contract even if the contract tries to prohibit it. (See R 2d§89 or UCC2-209 as to requirements for modification with or without consideration.

Rule #1: Preliminary Negotiations

Parties are always free to change terms during preliminary negotiations - even if the preliminary stuff is in writing.

Rule #2: Subsequent to the Agreement

The parol evidence rule does not prevent proof of oral or written agreements subsequent to the written agreement.

Exception #3: Stated Occurrence

The written contract would not take effect until some stated condition occurred. R2d 214

R2d 214 - Exceptions to the Parol Evidence Rule

a) The writing is not an integrated agreement b) The integrated agreement is complete or partial c) Meaning of the writing d) Illegality, fraud, duress, mistake, lack of consideration, or other invalidating causes, e.g. Bollinger e) Grounds for granting or denying rescission, reformation, specific performance, or other remedies.