Parol Evidence Rule Contracts – Prof. Merges March 14, 2011

Happy Birthday Ms Taylor!

Where are we going? Formation; Remedies “The law of the contract” – interpretation; substantive K rights

Parol Evidence Rule  Meaning? “Holy Roman Empire” analogy –Evidence? –“Rules”?

Gianni v. R. Russell & Co.

Facts Procedural History

What did Gianni want to prove at trial; what is he arguing he should have been allowed to prove?

Draft agreement with “Gianni’s term” in it “use the premises for the sale of fruit, candy, soda water, etc.”

Draft agreement with “Gianni’s term” in it “use the premises for the sale of fruit, candy, soda water, etc., Gianni to be the only tenant allowed to sell this type of merchandise” Exclusivity clause

Is this a case of interpreting the K?

No; Gianni wants to introduce evidence that the parties agreed to something else beyond the written K

Why did court not “reform” the K?

No fraud, mistake, accident – top p. 369

Terminology/analysis “independent oral agreement” “When does the oral agreement come within the field” of the written K?

What is the holding?

Why does the court say that the written agreement was “the entire contract”, or the “complete contract”  p. 370, top: “As the written lease is the complete...”

Independent K argument Question: is the TERM sought to be admitted within the same Field, Scope, or Subject as the written K? If SO, it is unlikely to be the subject of a separate K...

§ 209. Integrated Agreements (1) An integrated agreement is a writing or writings constituting a final expression of one or more terms of an agreement. (2) Whether there is an integrated agreement is to be determined by the court as a question preliminary to determination of a question of interpretation or to application of the parol evidence rule.

(3) Where the parties reduce an agreement to a writing which in view of its completeness and specificity reasonably appears to be a complete agreement, it is taken to be an integrated agreement unless it is established by other evidence that the writing did not constitute a final expression.

§ 210. Completely And Partially Integrated Agreements (1) A completely integrated agreement is an integrated agreement adopted by the parties as a complete and exclusive statement of the terms of the agreement. (2) A partially integrated agreement is an integrated agreement other than a completely integrated agreement.

(3) Whether an agreement is completely or partially integrated is to be determined by the court as a question preliminary to determination of a question of interpretation or to application of the parol evidence rule.

§ 213. Effect Of Integrated Agreement On Prior Agreements (Parol Evidence Rule) (1) A binding integrated agreement discharges prior agreements to the extent that it is inconsistent with them. (2) A binding completely integrated agreement discharges prior agreements to the extent that they are within its scope.

Gianni Completely integrated agreement; could not introduce evidence of consistent additional term

Why would a party such as Russell favor this rule?

Written K’s on file... Less opportunity for sympathetic jury to help out the little guy

Masterson v. Sine

Facts Procedural History

Masterson What term did the Sines wish to introduce into the contract?

Masterson What term did the Sines wish to introduce into the contract?  Option “limited to family members,” or “personal to the Mastersons”

Analyze in terms of R2d

Integrated? Complete or partial?

Additional points “Default rule” – read into K? (free alienability of options) No reformation here either

Drafting solution How could the grant deed/K have been drafted to prevent the introduction of evidence re: the “keep it in the family” clause?

Drafting solution How could the grant deed/K have been drafted to prevent the introduction of evidence re: the “keep it in the family” clause? Complete integration clause – probably

Bollinger v. Central PA Quarry

Facts History Holding

Limits on reformation When will it be applied?

Reformation “there was a mistake between the parties, [it] was real and not feigned, actual and not hypothetical” How does the court know that here?

Evidence Immediate objection Contractor at first cleared away topsoil and replaced Contractor’s actions on neighboring land accorded with plaintiff’s version of the K