1. Parol Evidence Rule
    Rule of Substantive Law; Rule of exclusion

    Writing intended to embody the final expression of bargain (writing is an "integration"), any other expressions--written or oral---made prior to the writing, as well as any oral expressions contemporaneous with the writing, are inadmissible to vary the terms of the writing.

    Applies to both oral and written evidence of agreement allegedly made prior to the execution of the final writing, it covers only evidence of oral agreement made at the same time (contemporaneously) with the final writing.

    Extrinsic evidence
  2. Integration
    Writing intended to embody the final expression of bargain.

    The more complete the agreement appears to be on its face, the more likely it is that it was intended as an integration.
  3. Complete integration
    may not be contradicted or supplemented.
  4. Partial integration
    Cannot be contradicted but may be supplemented by proving up consistent additional terms.
  5. Merger clause
    Complete on its face strengthens the presumption that all negotiations were merged in the written document.
  6. Judge's decision whether writing was an integration of all agreements between the parties.
    Yes - exclude evidence of prior written or oral terms, or contemporaneous written terms, that seek to vary the terms of the integrated writing.

    No - May admit the offered extrinsic evidence and jury decides if extrinsic evidence is part of the agreement.
  7. UCC §2-202
    Parol Evidence:

    agreement set forth in writing intended by parties as a final expression of agreement cannot be contradicted by evidence of any prior agreement or of a contemopraneous oral agreement but may be explained or supplemented

    a)  by course of dealing or usage of trade or by course of performance; and

    b)  by evidence of consistent additional terms unless the court finds the writing to have been intended also as a complete and exclusive statement of the terms of the agreement.
  8. R2d §213
    1)  binding integrated agreement discharges prior agreements to the extent that it is inconsistent with them.

    2)  binding 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.
  9. No-oral modification clause
    UCC §2-209

    A signed agreement which excludes modification or rescission except by a signed writing cannot be otherwise modified or rescinded.  However (4) what may fail to be effective as a modification or rescission may nevertheless be ffective as a waiver.  (5)  A material change of position in reliance on the waiver may prevent is retraction.
  10. Integrated Agreements
    1)  a writing or writings constituting a final expression of one or more terms of an agreement.

    2)  whether integrated is to be determined by the court as a question preliminary to determination of a question of interpretation or to application of the parole 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.
  11. Plain Meaning Rule
    For extrinsic evidence and has a two stage rule:

    • 1)  judge determines whether language in written agreement, with respect to dispute in
    • question, admits of only one plausible meaning or, rather, is ambiguous.
    •    -If not ambiguous - extrinsic evidence as to its meaning will be excluded.

    • 2)  court determines meaning of K language.  1st stage determined ambiguous extrinsic
    • evidence admitted to inform court's determination of the meaning of the
    • contract language.
  12. Methods of Interpreting Ambiguous Contracts:

    when applicability in marginal situations is uncertain. 

       Ex. Parties contract for the removal of "all the dirt" on a given tract, may sand from a stratum of subsoil be taken?

         -sometimes useful as a means of delegating decisions to a later adjudicator at such time as a dispute on particular facts arises.

    • Ex:  a reasonable time; faith and fair dealing;
    • and best efforts
  13. Methods of Interpreting Ambiguous Contracts:

    • has two entirely different connotations so that it may be at the same time both
    • appropriate and inappropriate, as is the case for "light" when applied to dark feathers.


    Inconsistent provisions
    ...between different parts of written agreement; lawyer's version of syntactical ambiguity.

    The role of punctuation
    Commas are sometimes effective, sometimes not.

    The statutory analogy
    an obvious similarity between the interpretation of contracts and that of statutes.

    -Are the policies for or against the use of legislative history as an aid to statutory interpretation similar to those for or against the use of negotiations (transactional history) as an aid to contract interpretation?

    Purpose interpretation
    • 1)  examination of the law before enactment of the statute
    • 2)  ascertainment of the "mischief or defect" for which the law did not
    • provide
    • 3)  analysis of the remedy provided by the legislature to "cure the disease"
    • 4)  determination of the "true reason of the remedy"
    • 5)  application of the statute so as to "suppress the mischief, and advance
    • the remedy."
  18. Lord Escher's three rules
    • 1) if recitals are ambiguous, the recitals govern the construction;
    • 2) if both the recitals and the operative part are clear, but they are inconsistent with each
    • other, the operative part is to be preferred.
  19. Public Interest
    may affect the interpretation of contracts
  20. Maxims
    • Same rules of thumb that are used in the interpretation of statutes are also used in the
    • interpretation of contracts
  21. Ejusdem generis
    Of the same kind
  22. Expressio unius est exclusio alterius
    Expression of one thing is the exclusion of another
  23. Noscitur a sociis
    It is known from its associates
  24. Function of Judge and Jury
    -in matters of contract interpretation is best left to a course in evidence or procedure.

    • -written interpretation of written agreements, as to which there is no dispute over the
    • words used by the parties, has often been withdrawn from the jury by calling it
    • a question of "law" for the judge, rather than a question of "fact" for the jury.

    -Chief Justice Traynor - "solely a judicial function to interpret a written instrument unless the interpretation turns upon the credibility of extrinsic evidence."
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