Parol Evidence Rule

Question 1

What is the Parol Evidence Rule? 2-202

Answer 1

Limits the ability of parties to introduce prior oral or written agreements that contradict a final written contract

Question 2

Parol Evidence only applies if the evidence is: (2)

Answer 2

1. A prior or contemporaneous (Before or At the Time of a written contract)
2. Oral or Written agreement

Question 3

Although Contradictory evidence is not allowed, the contract can be explained or supplemented in the following ways: (2)

Answer 3

1. By Course of Performance, Course of Dealing, Usage of Trade
2. By evidence of consistent additional terms

Question 4

What is the difference between totally v. partially integrated agreement?

Answer 4

1. Totally Integrated: writings that set forth parties final agreement about ALL terms, PE inadmissible to supplement (add to) or contradict contract
2. Partially Integrated: Writings that set forth parties final agreement about SOME terms. Excludes PE inconsistent with agreement. PE admissible to supplement (not contradict) contract

Question 5

Restatement 214: Exceptions for Parol Evidence Rule

Answer 5

Evidence is allowed in the following cases:
1. Determine whether the writing is integrated, if it is not, outside terms may be allowed
2. If contract is partially integrated, additional consistent terms may be admitted supplementing it
3. Explain ambiguous terms
4. Prove invalidity (fraud, duress, mistake, etc)
5. Courts can use to grant or deny rescission, reformation, or specific performance

Question 6

Restatement 213: Integrated Agreement & Prior Agreements

Answer 6

1. Prior agreements are discharged if they conflict with integrated agreement, even if they are oral or written
2. Fully integrated supersedes all prior agreements with the same subject matter, even consistent additional terms
3. If integrated agreement is voidable or not legally binding, it does not eliminate prior agreements

Question 7

Modification, Rescission and Waiver with Parol Evidence: 2-209: Applies to later modifications

Answer 7

1. Governs ability to modify a contract AFTER it has been formed
2. Does not require consideration to be enforceable
3. Conduct may be sufficient
4. Oral agreements are allowed unless prohibited by the SOF or by a NO ORAL MODIFICATION CLAUSE:
   - All parties are merchants = NOM clause always enforceable
   - One party is Non-Merchant = NOM clause enforceable only if separately signed by the non-merchant

Question 8

What are the Steps for Applying Parol Evidence Rule? (4)

Answer 8

1. Is there a writing?
   - No: Consider SOF
   -Yes: go to step 2
2. Is the writing integrated?
   -If Not: Parol Evidence is admissible
3. Is the writing fully or partially integrated?
   -If Fully - only evidence of performance/dealing/usage of trade allowed
   -If Partially - Consistent additional terms may be admitted
4. Does the evidence contradict the writing?
   - If yes - inadmissible
   - If no - Admissible if writing is not fully integrated