A manufacturer entered into a contract with a retailer to supply 1,000 units of a new product at $50 per unit, with delivery scheduled for June 1st. The contract contained an integration clause stating that the written agreement was the final and complete expression of the parties' agreement. Before signing the written contract, the manufacturer's sales representative orally assured the retailer that the units would be 'top-of-the-line quality' and 'guaranteed to sell out within a month.' The written contract only stated that the units would be of 'merchantable quality.' The units delivered were of merchantable quality but did not sell out quickly. The retailer sued, claiming breach of the oral 'top-of-the-line' warranty. Will the retailer likely succeed?
- ANo, because 'top-of-the-line quality' is too vague to constitute an enforceable warranty.
- BNo, because the parol evidence rule prohibits the introduction of prior oral agreements that contradict a fully integrated written contract.
- CYes, because the oral assurance created an express warranty that was breached.
- DYes, because the oral statement was an inducement to contract and therefore enforceable.
Show answer & explanationAnswer & explanation
Correct answer: B. No, because the parol evidence rule prohibits the introduction of prior oral agreements that contradict a fully integrated written contract.
The parol evidence rule prevents the introduction of prior or contemporaneous oral or written agreements to contradict, vary, or add to the terms of a fully integrated written contract. An integration clause typically indicates that the contract is fully integrated. Since the written contract specified 'merchantable quality,' the prior oral assurance of 'top-of-the-line quality' would be excluded, as it contradicts or adds to the agreed-upon quality standard.
Why the other options are wrong
- A. While 'top-of-the-line' could be vague, the primary issue here is the parol evidence rule and the integration clause.
- C. While an oral assurance can create an express warranty, it is inadmissible under the parol evidence rule if it contradicts a fully integrated written contract.
- D. Even if an inducement, the parol evidence rule still applies to prevent contradictory terms from being introduced into a fully integrated contract.
Parol Evidence Rule (Integration Clause)
A rule of evidence that prevents parties to a written contract from introducing prior or contemporaneous oral or written agreements that contradict, vary, or add to the terms of a fully integrated written contract.
- Applies to fully integrated written contracts (often indicated by an integration clause).
- Excludes evidence of prior/contemporaneous agreements, not subsequent modifications.
- Does not bar evidence to explain ambiguous terms, prove fraud, or show conditions precedent.
- A 'partial integration' allows consistent additional terms but not contradictory ones.
Memory trick: Written words rule, unless they're ambiguous or fraud's the fuel!