A small business owner enters into a written agreement with a supplier for 500 widgets at $5 each, to be delivered monthly over a year. The written contract states the price, quantity, delivery schedule, and payment terms. Before signing, the parties orally agreed that the widgets would be 'top-grade quality,' but this term was not included in the final written contract. When the first shipment arrives, the business owner claims the widgets are not 'top-grade' and attempts to introduce evidence of the prior oral agreement. Will the court likely allow this evidence?
- ANo, because oral agreements are never enforceable if a written contract exists.
- BYes, because the oral agreement clarifies the quality of the goods.
- CYes, because the oral agreement was made before the contract was signed.
- DNo, if the written contract is determined to be a complete integration.
Show answer & explanationAnswer & explanation
Correct answer: D. No, if the written contract is determined to be a complete integration.
The parol evidence rule prevents parties from introducing prior or contemporaneous oral agreements that contradict or vary the terms of a written contract intended to be a complete and final expression of their agreement (a complete integration). If the contract is only a partial integration, then consistent additional terms may be introduced.
Why the other options are wrong
- A. This statement is too broad; oral agreements can be enforceable, and the parol evidence rule has exceptions (e.g., to explain ambiguity, prove fraud, or show a partial integration).
- B. Clarification is generally allowed for ambiguous terms, but here it's an attempt to add a new term to a seemingly complete contract.
- C. The timing of the oral agreement (prior to signing) is precisely what triggers the parol evidence rule, not what allows its admission.
Parol Evidence Rule
A rule of contract law that prevents parties to a written contract from introducing extrinsic evidence of prior or contemporaneous agreements that contradict, modify, or vary the terms of a written contract that is intended to be a complete and final expression of their agreement.
- Applies only to prior or contemporaneous agreements.
- Bars evidence that contradicts or varies the written terms.
- Does not apply to evidence explaining ambiguous terms, proving fraud, or showing a partial integration.
Memory trick: Written words rule; no whispering old deals into the new contract.