Parol Evidence Rule Contracts Prof Merges March 14

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.

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?

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?

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?

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) Whethere 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?

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

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 R 2 d

Analyze in terms of R 2 d • 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

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