Contracts II Outline

Parol Evidence:
Parol Evidence Rule (PER): evidence of a prior or contemporaneous
agreement is inadmissible if it would vary or contradict the terms of a
totally integrated writing. In order to invoke the PER, it must be shown
that the parties intended to adopt the writing as their entire agreement.

The PER is a form of extrinsic evidence. Some evidence has to go through

a filter before we can allow it in.
o Extrinsic evidence means anything and everything that can help us
out.

PER tells you what comes in. It is an exclusionary rule designed to keep
out extrinsic evidence unless that evidence can make it through a series
of filters.

The PER is a defense to the enforceability of a contract term.

3 questions to ask: Exceptions

1. Does the evidence contradict what we have?
o If it contradicts its out. If it contradicts our contract, it does
not come in?
o Evidence that contradicts the writing is inadmissible unless it
is determined that there was no intent to integrate the
agreement of the parties into the writing.
2. Is the evidence a condition of the contract?
o If this happens than this happens.
o If so then it comes in every time.
3. Is it a statement subsequent after the contract was made?
o In order to meet the parol evidence filter the statement must
be made prior to or contemporaneously to the formation of
the contract.
o The PER does NOT apply to evidence of agreements between
parties subsequent to the execution of the writing.

Intent of The Parties:

o The intent of the parties determines whether there is total, partial,
or no integration. Parol evidence cannot be used to contradict any
term of a writing that is the final and complete expression of the
agreement between the parties, and no evidence can be introduced
as to any additional promises or representations made prior to the
time of the writing. A merger clause is evidence of the intent to
integrate.

o A partially integrated agreement can be supplemented, but a

completely integrated agreement cannot. The rule doesnt prevent
a party from proving that the agreement was not final, any defects
in formation, or anything that helps interpret ambiguous terms.

Two Parts of Parol Evidence:

o Integration: does the outside evidence/information come in?
Majority of issues with Parol Evidence.
This is a matter of law (decided by the judge).
o Interpretation:
Form of extrinsic evidence.
Designed to keep out evidence unless it makes it through.

Integration:
Typically there is information that is damning to one party; if it is
integrated then the contract is the totality of the agreement
intended by the parties.

Only written instruments intended by both parties as the final

expression of the terms of their contract are protected by the PER.

Integration determined from the written instrument:

o The most convenient way to reflect parties intentions as to the
writing is simply to state this intent in the body of the writing (an
integration clause).

Integration determined from extrinsic evidence:

o Relevant evidence may be introduced to establish that the parties
regarded the written instrument as the final and complete
embodiment of their contract.

There are six strategies to decide integration:

1. 4 Corners:
o Judge looks at the contract and determines what is
integrated by what is in the contract. If the judge finds that
the writing is complete on its face then it is totally
integrated.
2. Collateral Contract Concept:
o Is the other agreement (in form) collateral?
Collateral: does it support, supplement
o Does it contradict an express implied provision of the
written contract?
o Would it be one the parties would ordinarily have included
in writing?

3. Willistons View: Reasonable Person Approach

o Merger Clause: if a merger integration clause exists (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.
o If there is no merger integration clause, ask: Would it have
been natural for the parties to include 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.
o Rejected 4 Corners and Collateral Concept.
4. Corbins View:
o Look to true intention of the parties and allow judge to look
at ALL relevant, extrinsic evidence. Its clear that Corbins
view undercuts the parol evidence rule, and some say is
current trend.
5. UCC 2-202: SALE OF GOODS
o 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 dealing,
usage of trade or course of performance.
6. Restatement II:
o Its a mixture of Restatement 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.

Situations Where Parol Evidence Analysis Is Not Done:

o The PER DOES NOT APPLY to or exclude the following information
(the evidence/information is admissible):
Evidence on whether the writing is integrated. The judge
considers all relevant evidence to determine whether the
writing is integrated

Statements/ agreements subsequent to the writing

Evidence to interpret a writing
Evidence to show that a condition to formation of the contract
exists
Evidence to show matters of avoidance exists (fraud, duress,
mistake, etc.)