long cont.ii. - Contracts II The Effects of Adopting a...

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Contracts II The Effects of Adopting a Writing 456-496 1/08 Reading a. The Parole Evidence Rule - Parol Evidence Rule limits the extent to which a party may establish that discussions or writings prior to the signed written contract should be taken as part of the agreement. - In certain circumstances, the rule bars the fact-finder from considering any evidence of certain preliminary agreements that are not contained in the final writing, even though this evidence might show that the preliminary agreement did in fact take place and that the parties intended it to remain part of their deal despite its absence from the writing. i. When to Use : PER does not apply to subsequent agreements – only applies to prior or contemporaneous agreements (written or oral) that seek to establish legal enforceability of a promise . ii. Integration: Complete vs Partial ( see Mitchell v Laith – ice house removal case) 1. Completely Integrated – full and complete embodiment of contractual relationship. Earlier or contemporaneous agreements w/in this scope are unenforceable; unrelated agreements are still enforceable. 2. Partially Integrated – complete with respect to some aspect of contractual relationship. Earlier agreements consistent w/ written agreement (and w/in scope) are enforceable. only collateral promises will be enforceable. o 1. Partial Integration: a document that is intended to be final, but that is not intended to include all details of the parties agreement When there is a partial integration, no evidence of prior or contemporaneous agreements nor negotiations,(oral or written) may be admitted if this evidence would contradict a term of the writing. Hatley v. Stafford Facts: Hatley signed a lease to rent a farm from Stafford to grow wheat. Hatley claimed that there had been an additional oral agreement that the buy out could only be done within the first 30-60 days of the lease. Hatley sued for trespass. The trial court allowed Hatley to introduce evidence of the oral agreement. Hatley won, and Stafford appealed on the basis that Hatley shouldn’t have been allowed to use the oral evidence. Issue: Should the evidence of the oral agreement been allowed? Rule: The parol evidence can only be introduced if: (1) the oral agreement was not inconsistent with the written agreement, and (2) the oral agreement was such that it might “naturally” be made separately from the written agreement “by parties situated as were parties to the written contract”. Analysis: The court says that a term of the oral agreement must contradict an express provision of the written agreement in order to be considered inconsistent with it. Therefore, this part of the rule is satisfied because the written agreement doesn’t say anything about a buy out. The next question is whether the buy out time limitation would have “naturally” been included in the written agreement. The court finds it important, though not dispositive, that the contract appears on its face to be on such poor terms to the lessee in regard to the value of the wheat.
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