California First-Year Law Students' Exam (Baby Bar) — MCContractsEasy
A small business owner enters into a written agreement with a supplier for 500 widgets at $10 each, to be delivered in two installments. The written contract states it is the 'entire agreement' of the parties. Before signing, the supplier orally promised the owner a 10% discount if they paid within 10 days of each delivery. The owner pays on time but is not given the discount. Can the owner introduce evidence of the oral promise to enforce the discount?
- ANo, because the Parol Evidence Rule generally bars evidence of prior oral agreements that contradict a fully integrated written contract.
- BYes, because the oral promise was made before the contract was signed.
- CNo, unless the oral promise was also in writing.
- DYes, because the discount is a separate, collateral agreement.
Show answer & explanationAnswer & explanation
Correct answer: A. No, because the Parol Evidence Rule generally bars evidence of prior oral agreements that contradict a fully integrated written contract.
The Parol Evidence Rule prevents the introduction of evidence of prior or contemporaneous oral agreements that seek to vary, contradict, or add to the terms of a fully integrated written contract. The 'entire agreement' clause indicates full integration.
Why the other options are wrong
- B. This is incorrect. The timing (before signing) is precisely when the Parol Evidence Rule applies to exclude such evidence.
- C. This is incorrect. The rule applies to oral promises; reducing it to writing would make it part of the contract, not parol evidence.
- D. This is incorrect. A discount on the primary goods is not typically considered a separate collateral agreement when the written contract is fully integrated.
Parol Evidence Rule
A rule of contract law that prevents the introduction of evidence of prior or contemporaneous oral agreements that contradict or vary the terms of a fully integrated written contract.
- Applies to prior/contemporaneous oral or written agreements.
- Does not apply to subsequent agreements or evidence to explain ambiguities.
- Requires a 'fully integrated' written contract.
Memory trick: The Parol Evidence Rule is like a 'No Outside Voices' sign for written contracts.