Parol Evidence Rule
Contracts – Prof. Merges
March 14, 2011
Happy Birthday Ms Taylor!
Where are we going?
• Formation; Remedies
• “The law of the contract” –
interpretation; substantive K rights
• Parol Evidence Rule
 Meaning?
• “Holy Roman Empire” analogy
– Evidence?
– “Rules”?
Gianni v. R. Russell & Co.
Gianni v. R. Russell & Co.
• Facts
• Procedural History
• What did Gianni want to prove
at trial; what is he arguing he
should have been allowed to
prove?
Draft agreement with “Gianni’s
term” in it
• “use the premises for the
sale of fruit, candy, soda
water, etc.”
Draft agreement with “Gianni’s
term” in it
• “use the premises for the sale
of fruit, candy, soda water, etc.,
Gianni to be the only tenant
allowed to sell this type of
merchandise”
• Exclusivity clause
Is this a case of interpreting the
K?
Is this a case of interpreting the
K?
• No; Gianni wants to introduce
evidence that the parties
agreed to something else
beyond the written K
Why did court not “reform” the
K?
Why did court not “reform” the
K?
• No fraud, mistake, accident –
top p. 369
Terminology/analysis
• “independent oral
agreement”
• “When does the oral
agreement come within the
field” of the written K?
What is the holding?
What is the holding?
• Why does the court say that
the written agreement was
“the entire contract”, or the
“complete contract”
 p. 370, top: “As the written
lease is the complete . . .”
Independent K argument
• Question: is the TERM sought to be
admitted within the same Field, Scope,
or Subject as the written K?
• If SO, it is unlikely to be the subject of a
separate K . . .
§ 209. Integrated
Agreements
• (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.
§ 210. Completely And Partially
Integrated Agreements
(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.
§ 213. Effect Of Integrated
Agreement On Prior Agreements
(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.
Gianni
• Completely integrated
agreement; could not
introduce evidence of
consistent additional term
Why would a party such as
Russell favor this rule?
Why would a party such as
Russell favor this rule?
• Written K’s on file . . .
• Less opportunity for
sympathetic jury to help out the
little guy
Masterson v. Sine
Masterson v. Sine
• Facts
• Procedural History
Masterson
• What term did the Sines wish to
introduce into the contract?
Masterson
• What term did the Sines wish to
introduce into the contract?
 Option “limited to family
members,” or “personal to the
Mastersons”
Analyze in terms of R2d
Analyze in terms of R2d
• Integrated?
• Complete or partial?
Additional points
• “Default rule” – read into K? (free
alienability of options)
• No reformation here either
Drafting solution
• How could the grant deed/K have been
drafted to prevent the introduction of
evidence re: the “keep it in the family”
clause?
Drafting solution
• How could the grant deed/K have been
drafted to prevent the introduction of
evidence re: the “keep it in the family”
clause?
• Complete integration clause – probably
Bollinger v. Central PA Quarry
Bollinger v. Central PA Quarry
• Facts
• History
• Holding
Limits on reformation
• When will it be applied?
Reformation
• “there was a mistake between
the parties, [it] was real and not
feigned, actual and not
hypothetical”
• How does the court know that
here?
Evidence
• Immediate objection
• Contractor at first cleared away topsoil
and replaced
• Contractor’s actions on neighboring
land accorded with plaintiff’s version of
the K