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Contracts II - I Parol Evidence Rule A Definition 1 Bars...

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I. Parol Evidence Rule A. Definition 1. Bars consideration of evidence that adds to or contradicts the document. 2. Governs when a party to a written K can introduce evidence that the parties agreed to some particular term that is not included in the final document. 3. Evidence of oral or written negotiations or agreement that either pre-date or were contemporaneously made with a final writing. 4. The court will ask: is the term contained in the purported warranty outside the K one that the parties would have included in the K itself had they intended it to be party of the agreement? a. Yes: intended not to include term b. No: not included B. Integration: final expression of an agreement 1. Factors: a. Merger Clause: expression of final written agreement in K; strong evidence but not dispositive b. Disclaimer Clause c. Nature and scope of prior negotiations d. Extrinsic terms e. Sophistication of parties f. Subsequent Writing: unless a K includes a “no oral modification” clause, subsequent writing is taken together w/ written agreement g. Waiver: effect of NOM clause is weakened when A is held to have waived the benefit of the NOM clause by inducing B to rely on A’s oral statements 2. Types: a. Partially Integrated Document- brought in so long as it’s supplemental/explanatory and so long as it is not contradictory; if it is final expression of at least one of the terms; parties may introduce terms not in writing but previously agreed to. b. Totally Integrated Document- a complete and exclusive expression of all terms; all other evidence excluded c. Integrated Writing- § 209 C. Approaches: 1. Williston/4 corners View : judge should only examine the final writing on its face to determine if writing is complete; if it is complete, most court will not go beyond the 4 corners of the document, thereby precluding parol evidence; if writing is incomplete, it is a partially integrated document and court allows parties to introduce evidence. Today, courts look at 4 corners and some of surrounding circumstances (time frame, how and whom
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negotiations were undertaken); do not allow testimony of parties about what agreements were. 2. Corbin/Restatement § 210-214 : put in all evidence tending to substantiate the claim D. Interpretation 1. Ambiguity: 2. Methods: a. Four Corners i. Test: If “reasonable people could find its terms susceptible to more than one interpretation” (Ethyl) ii. Look to document to determine its meaning: If unambiguous, inquiry is ended. If ambiguous, can bring in trade usage (industry standard), course of dealing (multiple K’s), and course of performance (1K, multiple performances, but may not be same in this K).
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