Parol evidence funnel
Interpretation · Jan 27
Floor. ~40 min: R2d § 209 + the integration test + Gianni (and Mitchill). The doctrine the next class assumes you have covered.
Target. ~75 min: Floor + UAW-GM v. KSL + R2d § 210 + the exceptions + common-law/UCC worked example + synthesis.
(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.
(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.
(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.
(3) An integrated agreement that is not binding or that is voidable and avoided does not discharge a prior agreement. But an integrated agreement, even though not binding, may be effective to render inoperative a term which would have been part of the agreement if it had not been integrated.
R2d § 213(1): a binding integrated agreement discharges prior agreements to the extent it is inconsistent with them. Despite the name, the rule is not about oral evidence and is not an evidence rule — it is a rule of substantive contract law about which prior terms survive a final writing.
Three jobs the rule does:
281 Pa. 320, 126 A. 791 (1924)
Supreme Court of Pennsylvania
Rule. Where the parties have adopted a writing as the final expression of their agreement on a subject, prior or contemporaneous oral agreements on the same subject are merged into the writing and cannot be proved to add to or vary its terms.
Two questions, in order:
How courts decide completeness: the face of the writing (does it look whole?), a merger clause if present, and whether the alleged term is one the parties "would naturally" have included.
247 N.Y. 377, 160 N.E. 646 (1928)
New York Court of Appeals
Rule. An alleged oral collateral agreement is barred unless (1) it is collateral in form, (2) it does not contradict the writing's express or implied provisions, and (3) it is one the parties would not ordinarily be expected to embody in the writing. Where the writing appears full and complete, a collateral oral promise a reasonable person would have expected in the writing will not be enforced.
228 Mich. App. 486, 579 N.W.2d 411 (1998)
Michigan Court of Appeals
Rule. A merger clause is strong, often conclusive, evidence that the writing is a complete integration of the parties' agreement. Once integration is established, the parol evidence rule bars evidence of prior or contemporaneous agreements that contradict or supplement the writing, including 'collateral' oral promises on the same subject.
Facts. Manufacturer and Distributor sign a one-page written distribution agreement with a merger clause: "This is the complete and exclusive agreement of the parties." During negotiations, the manufacturer''s rep orally promised Distributor a minimum order quantity of 10,000 units per year. After signing, Manufacturer orders only 5,000 in year one. Distributor sues, offering proof of the oral 10,000-unit promise.
Question. Result under (a) the R2d (Gianni-style)? (b) the UCC if this is a sale of goods?
Answer. Both routes likely exclude the evidence on the contradiction theory: a 10,000-unit floor contradicts the silent writing (and a merger clause sharpens the inference of complete integration). But the UCC analysis under § 2-202(b) explicitly admits "consistent additional terms" unless the writing was intended as a complete and exclusive statement. With a merger clause, "complete and exclusive" is signaled. Without it, § 2-202 is more permissive than the PA common law in Gianni. UCC comment 3: "if the additional terms are such that, if agreed upon, they would certainly have been included in the document in the view of the court, then evidence of their alleged making must be kept from the trier of fact."
Even against a complete integration with a merger clause, parol evidence is admissible for purposes the rule does not bar:
Facts. Same UAW-GM facts, except the union pleads that the resort''s agent knowingly lied about the union-staff commitment to induce the union to sign. The fraud claim, not just breach.
Question. Does the parol evidence rule bar the fraud evidence?
Answer. No. R2d § 214(d) and universal common-law authority recognize a fraud exception. Parol evidence is admissible to prove fraud in the inducement, even against a merger clause. The doctrinal logic: PER bars evidence offered to vary the contract''s terms. Fraud evidence is offered to invalidate the contract. Different question, different evidence rule.
Subtlety: some jurisdictions narrow the fraud exception to fraud about facts not in the contract (avoiding the so-called fraud-in-the-inducement loophole that would swallow PER). Watch for jurisdictional variation.
Also available: Problem 17.2 — Capitol City Liquor Company (Lee v. Seagram): a merger agreement with no integration clause and an oral promise to relocate the sellers.
Walk through the analysis on the board. Hit the rule, the elements, the line of authority, the answer.
Rules. R2d § 209, R2d § 210, R2d § 213.
Cases. Gianni v. R. Russell & Co. · UAW-GM Human Resource Center v. KSL Recreation Corp..
Open question. Gianni and UAW-GM are both Willistonian wins for the writing. What does the Corbin side of the doctrine look like? Next class: Sierra Diesel and the contextualist counterweight.
Next class: PER Part II: Williston vs. Corbin
_Interpretation_ · Feb 2
Read Sierra Diesel v. Burroughs. The same parol evidence question splits two of the great treatise writers. Williston asks the judge to read the writing on its face; Corbin asks the judge to consider all the surrounding context first. The case asks whose method the UCC adopts and what difference it makes to a sophisticated seller using pre-printed forms. Come ready to answer. You may be called.