A buyer and a seller enter into a written contract for the sale of a commercial property. The contract includes a clause stating, 'This written agreement constitutes the entire agreement between the parties and supersedes all prior discussions, negotiations, and agreements, whether oral or written.' The buyer later attempts to introduce evidence of an oral agreement made prior to the written contract, where the seller promised to include a specific piece of equipment with the property. Under the Parol Evidence Rule, will the court likely admit this evidence?
- ANo, because the integration clause indicates the written contract is the final and complete agreement.
- BYes, because the oral agreement concerned a separate and distinct matter not directly contradicting the written contract.
- CNo, unless the equipment was specifically listed as excluded from the sale in the written contract.
- DYes, if the oral agreement was made fraudulently to induce the buyer into the contract.
Show answer & explanationAnswer & explanation
Correct answer: A. No, because the integration clause indicates the written contract is the final and complete agreement.
The Parol Evidence Rule generally prevents the introduction of prior or contemporaneous oral or written agreements that contradict, vary, or add to the terms of a fully integrated written contract. An integration clause, like the one here, is strong evidence that the parties intended the written contract to be the complete and final expression of their agreement.
Why the other options are wrong
- B. The promise to include equipment directly relates to the property sale and would likely be considered within the scope of the integrated contract.
- C. The rule prevents adding terms that should have been in the fully integrated contract, regardless of whether they were explicitly excluded.
- D. Fraud is an exception to the Parol Evidence Rule, but the question does not indicate fraud, only an attempt to add a term.
Parol Evidence Rule (Full Integration)
A rule of contract law that prohibits the introduction of extrinsic evidence (oral or written) of prior or contemporaneous agreements to contradict, vary, or add to the terms of a fully integrated written contract.
- Applies to fully integrated contracts (intended as final and complete).
- Prevents introduction of evidence that would change the written terms.
- Exceptions exist for clarifying ambiguity, proving fraud, or showing a condition precedent.
Memory trick: Written words rule the day, no outside talk will sway.