The Parol Evidence Rule

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Yale Law School

Yale Law School Legal Scholarship Repository Faculty Scholarship Series

Yale Law School Faculty Scholarship


The Parol Evidence Rule Arthur Corbin Yale Law School

Follow this and additional works at: Part of the Law Commons Recommended Citation Corbin, Arthur, "The Parol Evidence Rule" (1944). Faculty Scholarship Series. Paper 2901.

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THE PAROL EVIDENCE EVIDENCE RULE ARTHUR ARTHUR L. CORBIN CORBIN t expressed it in a WHEN WHEN two parties have made a contract and have e.xpressed writing to which they have both assented as the complete complete and accurate integration of that contract, evidence, whether parol or otherwise, of anintegration tecedent tecedent understandings understandings and negotiations will not be admitted for the contradicting the writing. This is in substance what what purpose of varying or contradicting "parol evidence rule," rule," a rule that does not deserve is called the "parol deserve to be called called a rule of evidence of any kind, and a rule that is as truly applicable applicable to to name for this written evidence evidence as to parol evidence. evidence. The use of such a name rule has had unfortunate unfortunate consequences, principally by distracting distracting attention attention any one or from the real issues that are involved. These issues may be anyone or (2) Is more of the following: (1) (1) Have Have the parties made a contract? contract? (2) Is that contract contract void or voidable voidable because of illegality, fraud, mistake, or any (3) Did the parties assent to a particular writing as the other other reason? (3) complete complete and accurate integration integration of that contract ??1 "parol evidence rule" to be apIn determining these issues, there is no "parol In plied. On these issues, no relevant evidence, whether whether parol parol or otherwise, othen'lise, is excluded. No written document is sufficient, sufficient, standing alone, to deterhowever one of them, however mine any anyone however long and detailed it may be, however formal, and however many may be the seals and signatures and assertions. In In determining determining these issues, however, there is no necessity for for being gullible or simple minded. The party presenting the writing will • completeness. The form testify to its execution execution and to its accuracy and completeness. document may strongly corroborate corroborate his testimony; testimony; and substance substance of the document or it may not. There may be disinterested disinterested witnesses who corroborate corroborate him may or may not be corroboration or contradict contradict him. There There mayor corroboration by virtue of of other circumstances that are are proved. When \Vhen the other party testifies to contrary on any of these issues, he should always be listened to; but the contrary but School. ttWilliam William K. Townsend, Professor of Law, Emeritus, Yale Law Law School. 1. A contract may be held to be fully integrated integrated in writing, even even though there are arc See Curtis v. Pierce, 157 Ga. several writings in which parts of the contract contract are contained. Sec Gao (bond for deed, inventory, and writing setting out terms of 717, 122 S. E. 208 (1924) (1924) (bond of (1924) (three agreement) ; Sig. C. Mayer agreement); Mayer & & Co. v. Smith, 112 Ore. 559, 230 Pac. 355 (1924) telegrams). telegrams). 603

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overwhelmed he does not have to be believed. His testimony may be so overwhelmed that it would be credited credited by no reasonable man; or it may not. Perhaps a verdict should be directed; but perhaps perhaps not. This is a question of weight admissibility.2 of evidence, not of admissibility.2 2. In Strakosch Strakoseh v. Connecticut Trust & & Safe Safe Deposit Deposit Co., 96 Conn. 471, 479, 114 Ati. AU. (1921) the court said: "Whether the parties intended the writing to embody 660, 663 (1921) embody be their entire entire oral agreement or only a part of it, was a question for the trial court, to be determined from the conduct and language language of the parties and the surrounding surrounding circumstances. circumstances• agreement in the writing, ....• . Where Where the parties parties do not intend to embody their entire oral oral agreement E, 555 the rule invoked invoked does not apply." In Higgs v. Maziroff, Maziroff, 263 N. Y. 473, 189 N. E. 555 (1934), (1934), a written contract contract for a loan provided that the defendant should give a note note for $15,000 $15,000 payable .for payable in nine months. In an action on this note, the defendant testified testified objection without obj ection that the plaintiff plaintiff had agreed the note was to be payable payable only out of the proceeds of certain paintings desposited as security. The trial court's judgment for the contract was as matter law defendant was reversed reversed on appeal, the court court saying, "The "The contraot matter of taw integrated Id. at 479, 189 N. E. at 557. It may be that the partieg integrated by the writings." writings." ld. parties had had .he writing both assented assented to nnection inad· might be used as a parking place missible as varying varying the plain meaning of a contract required to be in writing. Co. V. v. Lorenzo, 222 S.481 (1912), 42. Porto Rico Sugar CO. Z22 U. S. (1912), holding holding that a contract contract to grind sugar, when read with knowledge knowledge of the business, shows itself to be a contract to grind in the grinding season, and parol season admissible to show what that season parol evidence is admissible Tuscaloosa Veneer Co., Co., 237 Ala. is in a given place; place; American American Mut. Liability Liability Ins. Co. v. Tuscaloosa (1939) ; Colonial Trust Co. v. Joseph Atl. 187, 186 So. 133 (1939); Joseph Hilton, Inc., 111 Conn. 77, 149 At!. 513 (1930); (1930) ; Reilly Tar & v. Lewis, 301 Ill. 111. App. 459, 23 N. & Chem. Corp. V. N. E. (2d) (2d) 243 243 (1939) ; Hurst V. v. W. J. J. Lake & Co., 141 Ore. 306, 16 P. (2d) 627, 89 A. L. R. 1222, 1228 (1939) 1228 (1932), allowing a requirement of "minimum 50 per cent protein" protein" to be exNplained according (1932), e.-:plaincd according compliance to its meaning in the trade so as to show that 49.5 per cent protein was a compliance Co. V. v. Sheinman, 273 Pa. lOS, 105, 116 allowing Sheinman,273 116 Atl. 671 (1922), (1922), allowing therewith; Warner-Godfrey Warner-Godfrey CO. evidence of trade custom to show that a contract for forty inch voile is complied with with lnsrATEMaNr, by furnishing voile thirty-eight or thirty-eight and one-half inches inches wide; RESTATtMEN'f, CONTaACTS, §§ 230, 235(d). CONTRACIS, 235 (d). 43. "A word is not a crystal, transparent and unchanged, unchanged, it is the skin of a living thought and may vary greatly circumstances and the greatly in color color and content according to the circumstances

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anad unusual an an ass~rted asserted interpretation interpretation is, the more The more bizarre and convincing must be the testimony that supports it. At what point the court should cease listening to testimony that white is black and that a dollar is fifty cents is a matter for sound judicial discretion and common common st.:n~e. sense. Even these things may be true true for some purposes. As long as the court that there may be doubt and ambiguity and uncertainty in the is aware that. meaning and application of agreed language, it will welcome testimony as antecedent' agreements, communications, communications, and other factors that may to antecedent' issue."44 Such testimony does not vary or contradict the help to decide the issue.

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418, 425 (1918). (1918). time in which it is used." used." Justice Holmes in Towne v. Eisner, 245 U. S. 4113,425 source of of "The flexibility of or multiplicity in the meaning of words is the principal £ource difficulty in the interpretation interpretation of language. Words arc are the conduits by which thoughts communicated, yet scarcely any of them have such a fixed and and single meaning that are co=unicated, they are incapable of denoting more than one thought. In addition to the multiplicity in in meaning of words set forth in the dictionaries there are the meanings imparted to them by trade customs, local uses, dialects, telegraphic codes, etc. One meaning crowds crowds utterance Qf of any impurt. imprt. a word full of significance, while another almost empties the uUemnc,", indicated are constantly constantly amplib'ing amplifying our language; in fact, The various groups above indicated they are developing developing what may be called languages of their own. own. Thus one is justified in saying that the language of the dictionaries spo!ken in America• America. dictionaries is not the only language language sPQ!:en It is said that a court in construing tlle the language of tlle the rarties parties must put itelf ..... . It it~c1f into vernacular." the shoes of the parties. That alone would not suffice; suffice; it mut mu:,t also adopt their vernul:ular." WN. J. Lake & Co., 141 Ore. 306, 310, 16 P. (2d) (,27, 629 (1932). Hurst v. W. (2dl 1/2i,621) t1932). 44. Buchanan Swift, 139 139 F. F. (2d) (2d) 4S3 4S3 (c. (C. C. A. 7th, 1942) (promihe weely 44. Buchanan v. v. Swift, C. A. 7ili, 19·12) (promi~c to pay a wecl:1y sum "for years or or until until her her death" death" might might mean "or until her death if after 55 years") years"); ; sum "for 55 years F. (2d) (2d) 918 (C. C. A. 2d, 19331 193S) (alll.wi!13 (allimwing Standard Brands v. Eastern Eastern S. S. Lines, 97 F. Ie. c. evidence to show that a shipper Wharf' evidence to show shipper understood understood that the notation "freight "freight on hand India WharC' covered freight at anyone any one of three wharves of which India "113rf Wl'barf was one) covered one);; Smith v. 57 Idaho 715, 69 P. (2d) 131, 111 A. L. R. (1937) ; Keyser\'. Keyser v. Weintraub, Veintraub, Swendsen, 57Idaho (2d) 131,111 R 441, 448 44S (1\13i); 157 11d. evidence to e.,:plain explain what %vas ~fd. 437, 146 Atl. AU. 275 (1929) (1929) (allowing evidence was meant by the word agreement by defendant equally in any loss that plaintiffs word "loss" in an agreement defendant to share share equall)' mortgage) ; Schwartz might sustain sustain from uniting uniting in a certain mortgage); Schwartz v. Whelan, 295 295 Pa. Pa. 425, 425, 145 AU. AUt. 525 (1929) (1929) (allo\ving (allowing evidence evidence to show . . . in basement show whether whetller "plastering "plastering ••• bJ:ement there heing being 110 no where noted" meant to plaster the whole whole basement basenlent or just the janitor's room, room, tllerc writing or plan AN.(2d) (2d) 216 (Tex. Comm. App. plan to make it certain) certain) : Leonard v. Prater, 36 S. W. 216 (Te.,:. App. 1931) (allowing evidence to show that drilling an oil well was considered "the e."pcnse expense 1931) (allO\ving evidence considered part rart of "ilic of operating lease") Fayter v. North, 30 Utah 156, 83 Pac. 742 (1900) (1905) (oralnegotiatiQI1S (oral negotiations operating the lease") 156,83 to show that "appurtenances" "appurtenances" in a deed included a drainage v. Ero:mll, Brown, drainage ditch); Perkins Perkins ..... 179 (1934) (allowing "reimburse" 179 Wash. Wash. 597, 38 P. (2d) (2d) 253 (1934) (allowing evidence to show what "reimburse" meant Mortgage Purchaser meant in in the the phrase phrase "for which whicll },fortgage Purchaser herein agreeb agrec:> to reimburse reimburFc the Vendor"); Schwemer v. Fry, 212 Wis. 88, 249 (1933); Hammond Vendor"); 249 N. W. 62 (1933); Hammond v. Capital Capital City (1912) ("property City Mutual Mutual Fire Fire Ins. Co., Co., 151 Wis. Wis. 62, 138 N. N. W. 92 92 tM2) t"property of of Hammond Hammond Bros:' go'ds and goods Bros." shown shown by oral negotiations negotiations to include include both both partnership partnership gul.cds goods separately £cp=u-ately ownid). owned). Evidence negotiations has Evidence of antecedent antecedent understandings understandings and negotiations has been been allowed allowed for exe..... planatory purposes: subject-matter of an agreement, purposes: to identify identify the the subject-matter agreement, Yellowstone Ycllowstune Sheep Co. v. Diamond Dot Live Stock Co., 43 Wyo. 15, 15,297 1151, 1166 (1931) 297 Pac. 1107,75 1107,75 A. A. L. R. R1151,116G (1931) (holding of parol evidence of prior negutiations neg",tiatiQllS in order order to determine (holding proper proper the admission of what was meant by "old ewes" and so identify the "old ewes" the subject matter of the ilie sale) sale) ; to identify parties, Becker 148 Becker v. Farmers' Farmers' Mut. 11ut. Fire Ins. Co. Co. of Rock Tonship, TO\'.nship, 9.9 99 S. NN. \\. (2d) (2d) 143

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written words; words; it it determines determines that that which which cannot cannot afterwards afterwards be be varied varied or or written contradicted. contradicted. Mr. Mr. Justice Justice Holmes Holmes once once gave gave us us the the dictum dictum that that "you "you cannot cannot prove prove give language to parties the two a 'mere private private convention convention between between two parties to give language a a'mere different meaning meaning from its its common common one. It It would would open open too too great great risks risks ifif different evidence were were admissible admissible to to show show that that when when they they said five hundred hundred feet feet evidence they agreed agreed it should should mean mean one one hundred hundred inches, inches, or that that Bunker Bunker Hill they Monument should signify the Old South South Church." Church." 44G It It is believed, believed, howhow~ Monument great judge judge was was in error. The risks risks which which he he says says would would be ever, that the great "too great" great" are in fact fact being borne; borne; they they are are not not so great great as as he he feared. "too remember that that a person person asserting asserting that "five I'five hundred hundred feet" feet" was We must remember able of not being risk the heavy being used to mean "one hundred inches" bears heavy inches" bears hundred used to mean "one need persuade the court court and and jury jury that it is true. Often Often he w6uld would need the to persuade (allowing parol evidence evidence of prior negotiations to show plaintiffs plaintiffs were par1936) (allowing (Mo. App. 1936) under the the designation "Press "Press Becker Est. as per mentioned mentioned in will" will" ties intended intended to be insured under ties show the capacity capacity in which which a party party acts acts or the the real real relation in a fire policy); to show Colo. 210, 72 P. (2d) (2d) 271 271 (1937), (1937), of parties parties to a writing, Bieser Bieser v. Irwin, 101 Colo. (holding parol parol evidence evidence admissible admissible to show show that that a word added to a signature signature on a (holding dnderstood by the con;ote was was not not intended intended as descriptive but was was understood condescriptive of the person signing but note capacity) ;; tracting parties parties as indicating indicating that the contract contract was signed in a representative representative capacity) tracting to clarify language that is indefinite, indefinite, uncertain uncertain or ambiguous, Ethredge v. Diamond Drill Co., 196 Wash. 483, 83 P. (2d) (holding that the trial court court Contracting Co., (1938) (holding (2d) 364 (1938) Contracting statements of the interested interested parties parties at the time of signing the instruerred in not admitting statements therein) ; ment as to what they meant by the words "five "five consecutive consecutive days of drilling" used therein) to explain explain technical, trade or local local terms, California Canning Peah Peach Growers Growers v. Williams, "renter mem11 Cal. (2d) 221,78 mem(allowing parol explanation of term "renter (1938) (allowing 221, 78 P. (2d) 1154 (1938) ber" in marketing agreement association). agreement between fruit grower and cooperative association). In Smith v. Vose & & Sons Piano Co., 194 Mass. 193,80 (1907), the plaintiff concon193, 80 N. E. 527 (1907), tracted in writirtg writifig to drive a well "until 25 gallons of water per minute is obtained," for a specified compensation. The well was so driven and a flow of more than twenty-five gallons per minute was obtained. But the water was salt and unfit for the purposes of the conversadefendant. The court held that it was error to e.xclude exclude testimony of the oral conversations of the parties, at the time the contract was made, to show that the plaintiff promised Co., 188 Wis. 394, 206 to produce produce water that was not salt. In Jones v. Holland Furnace Co" (1925), an express warranty in writing provided that a furnace "shall give N. W. 57 (1925), defendant good heating service." service." The court admitted testimony that the agents of the defendant had assured the plaintiff that "good heating service" meant heat up to seventy degrees when the ten degrees below zero. temperature outside was ten the temperature used by terms, familiar to and Used "Reading into aa contract the true meaning of technical terms, the agreeterm of of the sense supplying by parol a missing term contract, is in no sense the parties to aa contract, of the parties the minds of supposed to have been in the ment. Such trade usage or meaning is supposed the words becomes a part of and hence the real meaning of the when the contract was made, and frauds is violated by nor the the statute of frauds rule nor the parol parol evidence rule ... Neither the the the contract contract ••. general underinto words of general technical terms used into of technical translation of reading into aa contract a translation reading into C. A. (C. C. (2d) 885,887 885, 887 (C. 12 F. F. (2d) D. Mullen Mullen Co., 12 standing." v. William D. Ref. Co. v. standing." Franklin Sugar R.ef. 1926). 3rd, 1926). L. REV. Ray. 417,420; 417, 420; 45. Holmes, The HARV. L. (1899) 12 HARv. Interpretation (1899) of Legal Legal Illterpretatlon The Theory Theory of Goode (1891). 28 N. E. 228 (1891). Riley, 153 Mass. 585, 28 v. Riley, Goode v.

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corroboration of a written code signed by the other party or of some corroboration special custom or usage usage of a group group of people. Custom and usage of a particular particular place place or trade can be proved to give to the words of a written contract contrac~ a meaning different from that usually common given them. This is true even though the words are in ordinary, common 40 expressing a period of time. use, such as words of number or words e.'\.-pressing time.-tll It is often stated as a rule applicable applicable to the law of wills that evidence evidenct; of statements statements of intention intention made by the testator is not admissible admissible in the determining the meaning to be given to his will. This ruleruleprocess of determining although its continued application application under modern modern conditions conditions of trial is not altogether approved by Thayer-is altogether Thayer-is regarded by him as a rule of evi47 dence rather rather than of substantive law.47 His supporting supporting illustrations are Whether taken from the cases dealing with wills rather than contracts. \Vhether the old notions of policy behind this rule are sound or not, the rule is not a part of, or an application application of, the "parol evidence rule." rule." In the law of of contracts, a statement statement by one of the parties as to what his intention intention was though may be quite immaterial. So also such a statement may be, even, though expressed when the contract is being made, unless it is communicated ~"pressed communicated to the other party. But a contractor is bound in accordance meaning accordance with the meaning that he knows or had reason to know the other party gave to the words Statements of intention and interof the contract when it was made. Statements pretations pretations then made are certainly not immaterial on that issue. The exclude proof of them on the issue of the "parol evidence rule" does not e.-,;:c1ude meaning interpretation of the words. meaning and interpretation Oral Proof Proof of Fraud, Fraud, Illegality, Illegality, Accident, Accidcnt, or or Mistake. Oral Mistake. Certain kinds transaction .of illegality, accident, and mistake have been said to make a transaction "completely void"-i.e., void"-i.e., to to prevent prevent the the existence e.-,;:istence of a contract. In such "completely cases, parol evidence evidence is admissible as has been previously previously stated. Fraud, of on the other hand, merely makes a contract contract voidable at the instance of the innocent party; the same is true of many types of illegality and mistake. 46. "A "A thousand" may be interpreted to mean twelve hundred when such is the usage in the rabbit business. Smith v. Wilson, WilSOll, 3 B. & Ad. 728, 110 Eng. Rep. Rcp. R. 265 256 (K. B. 1832). Also "white" "white" may be interpreted black, where by trade usage "white selvage" (K. B.1832). u-oage "white selvagc" meant [180] 2 Cn. un 181 (C. A.), meant a selvage that was relatively dark. Mitchell v. Henry Henry [1880] A.), reJessel who declared that 'nobody could convince blad: was versing Sir George Jesse! cOIn-incc him that blac!; was white.' & B. 703, 118 1304 (Q. (Q. B. 1854), 1854), a bill white.' In Brown Brown v. Byrne, 3 E. & 118 Eng. Rep. R. 130-l of lading fi.-.-ed fixed the freight to be paid on bales of cotton at "five penny Pll1' per "fivc eighths of a IJenn)' pound." At that rate the freight wvas the consignee %,aspermitted pound." was £138. £138. But Ule consignce \'.~ IJenlliucd to prove prl:Ne a custom of the port to allow a three months' discount, period of discount , even though there there was no periol!. credit, so that the amount payable was vas only £136. L136. "There is one thing which cannot, under our law, be used, nmmely, ex47. "There lIamely, extrinsic c.-.trinsic e....rightly pressions of the writer as to his intention in the writing. This is usually and riShU)' excluding rule of evidence evidence... does not rest upon any lack of matcrialit)· materiality regarded as an e.-..cluding ••• it docs impolicy and and probative value in such direct statements statements of intention, but upon the impoliC)' and danger THAYR, PRELThUN.\RY PmL.mnx.u.y TR kTIsE o:; Evinmnicn. (2d cd. ed. 1893) 1893) 414. danger of using them." them." THAYER, TREATISE ON EVlIJE.-.O:

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Whether they are such as to make the contract either void or voidable, it is Whether in no case denied that oral testimony testimony is admissible to prove prove fraud, illegality, accident or mistake. This is so, even though the testimony contra6 n in writing ;48 it is so. integration so. whether whether dicts the terms of a complete integrati enforcement.4109 the suit is for rescission or for reformation reformation and enforcement: A contract may provide for the payment of a sum of money in in: case of contradict breach "as liquidated damages." damages." Parol evidence evidence is admissible to contradict this language and to show that the sum so described described is in fact a "penalty" /lpenalty" lio unenforceable." Such a provision is legally void on grounds and therefore unenforceable. of social policy. (1901) (date v. New York Life Ins. Co., 183 U. S. S. 25 (1901) (date when premium 48. McMaster v. (2d) 294 (C. (C. C. A. F. (2d) was payable to avoid forfeiture) forfeiture) ; Cities Cities Service Oil Co. v. Dunlap, 100 100 F. Barnsdall Refining Corp. v. Birnam5th, 1938) 1938) (mistaken (mistaken description description of land corner) corner) ;i Barnsdall 1937) (fraud); Arnold v. Nat. Aniline & (2d) 817 (C, (C. C. F. (2d) C, A. 7th, 1937) wood Oil Co., 92 F. Rosenthal, 216 Cal. 721, 1927);; Endicott v. Rosenthal, F. (2d) 364 (C. Chemical (C, C. A. 2nd, 1927) Chemical Co., 20 F. (1932) (illegal 16 P. (2d) 673 (1932) (illegal restraint restraint of trade); Choolgian v. Nordstrom, 111 Conn. lack of consideration) consideration) ; Geremia v. Boyarsky, 107 Conn. (1930) (total At. 499 (1930) 572, 150 Atl. (to~llack offer) ; Smith v. Crockett Co., Att. 749 (1928) Co., 85 (1928) (mistake of addition in making offer) 387, 140 AtI. Conn. 282, 82 Att. (1912) (bribery) (bribery);; Cahow Cahow v. Hughes, 173 So. 471 (La. App. 1937) 1937) Atl. 569 (1912) Atl, subterfuge to disguise a donation) ; Gross v. Stone, 173 Md. 653, 197 Ad• (sale was a mere subterfuge (sale 106 (1938); American Mut. Liability Liability Ins. Co. v. Condon, 280 Mass. 517, 183 N. E. 106 . 137 (1938); insured) ;i Wells v. Niagara Land & (1932) (mistake (1932) (mistake in description description of an insured) & Timber Timber Co., 243 Mich. Mich. 550, 220 N. W. 667 (1928) (1928) (mistake in computing the price); Ganley Bros. v. v• (citing many cases); 373, 212 N. W. 602 (1927) (1927) (citing cases); Lyman . Butler Butler Bros. Bldg. Co., 170 Minn. 373, -v.Kimball, 82 N. H. 232, 131 At. -v. AU. 690 (1928) (1928) (illegality, (illegality, violation of the state prohibition prohibition Atl. 887 law); Downs v. Jersey Jersey Central Central Power and Light Co., 117 N. N. J. J. Eq. 138, 174 Ad. (1937) (duress) E. (2d) (1934);; Berg v. N. Y. 132, 99 N. N. E. (2d) 806 (1937) (duress);; Richeson Richeson v. v. Hoffman, 275 N. (1934) (illegality for usury). (1932) (illegality 269, 163 S. Wood, 158 Va. 269,163 S. E. 339 (1932) usury). S.E. 402 (1905), In Lytle v. Scottish Scottish Amer. Mortg. Co., 122 Ga. 458, 50 S. (1905), the court instrument said: "Even parol testimony is admitted to enable one to show that a written instrument It is always permissible to show that a paper is but a cover for is not valid, but void. It usury, penalty, forfeiture, or other illegal advantage to one of the parties. For if the law did not sedulously sedulously disregard form and seek for substance, nothing would be easier easier than 'rent' may be names to prohibited acts. What is called called 'rent' its evasion by giving innocent names unreasonable liquidated shown to be usury. What is called 'rent' 'rent' may be shown to be unreasonable liquidated purchase What is called called 'rent' 'rent' may be shown to be purchase purchase money, if, as purchase damages. wpat rescission." Id. money, it could not be retained by the vendor on rescission." ld. at 466, 50 50 S. E. at 406. A.), the wrong land In Craddock Bros. v. Hunt [1923] 2 Ch. 136 (C. (C, A.), land was described in in both the written contract contract and the ensuing deed of conveyance. The The court court was quite aware contract "with that it was enforcing a written contract "with a parol parol variation." a: T, CONTRArTS CoxraAcrs § 238. See also id. 49. See in accord RESTATEmE RESTATEMENT, id. § 509, comment a: "The "The right of reformation reformation of a contract wherever allowed is necessarily an invasion or or ... " parol evidence evidence rule; ... . limitation of the parol deduction, in the discretion of the 50. "The language employed in this contract for a deduction, $35 per day from the price to be paid for each day of delay in dedeChief of Ordnance, Ordnance, of $35 livery livery of each each gun carriage, respectively, respectively, taken in connection with the subject matter matter construction of that language in order to determine of the contract, leaves leaves room for the construction liquidated damages. While it is claimed claimed that there there is which was intended, a penalty or liquidated construction of the contract, even if the contract alone is really no doubt as to the proper construction

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acciA signed document document may have come into the plaintiff's hands by accito attempt plaintiff's dent or mistake, and the fraud may consist in the plaintiff's contract. But fraud in the inducement inducement of assent, or an enforce it as a contract. known to the other, may make the contract antecedent mistake by one k-nown antecedent contract existence, and without showing showing that the voidable without preventing preventing its e.xistence, integration of its terms. In writing was not agreed on as a complete integration such a case the offered testimony testimony may not vary or contradict the terms terms of the writing, although it would be admissible even if it did so; it merely merely collateral factors that have a legal operation of proves the existence existence of collateral their own, one that prevents the written contract from having the full or legal operation that it would otherwise have had. This is not varying or or contradicting the written terms of agreement, although it does vary or nullify millify in part their legal effect. to Agreenient It) Ony Part Part of An Agreement Partial Partial Integration-Reduction Integration-Reduction of Onl)' Writing. contract Writing. The two contracting parties have power to make their contract as they see fit, both as to the substance of its terms and the manner of its e..-pression. reduce some provisions provisions to written written form expression. They can agree to reduce and to leave others unwritten, trusting the latter to oral expression e.'\.-pression only. Such a writing \'\-'fiting has been described described as a partial partial integration; it is said that teparol evidence evidence rule" prewith respect to the provisions in writing, the "parol contradiction by testimony testimony of antecedent antecedent negovents their variation or contradiction 1 61 tiationsY tiations. We need not dissent from such a statement if the parties have in fact assented to such a partial integration integration and have drawn such clear clear boundaries boundaries assented what determine w'hat around the terms that are in writing, that the court can determine it is that they are meant to supersede. It should be observed, however, that agreement is partly written and partly oral, the oral part must when an agreement interpretation, application, and the interpretation, nearly always have some effect upon tlle extent, at least, the tllat is in writing. To this e.xtent, legal operation operation of the part that langua,ge meaning of langu3g~ to be considered, yet we think that much light is given as to the true meaning between the correspondence betwCCJ1 consideration of the correspondence that is not wholly free from doubt by a consideration circumstances we execution of the contract contract itself. itsclL Under Under such circumstam:cs parties before the final execution the the facts surrounding Ute never has been held that recourse could not be had to Ule think it never construction the purpose of determining the correct case and to the prior negotiations for Ute correct construclion case S. lOS, 105, 11::1 113 Co., 205 'G. U. S. Bethlehem Steel CO.,205 contract." United States of the language of the contract." States v. BeUtle1lem (1907). (1907). there is integration "Where Utere CoxRmAcrs § 239, reads as follows: "Where RESTATnmExT, CoNTRACl'S 51. 51. REsTATEMENT, integrati(;11 of part of the terms of a contract contract prior written agreements agreements and contemporaneous contemporaneous oral vhole the whole extent the -ame same e. . . .tent as if Ute agreements are operative to vary these terms only to Ule Wallace, 45 Tenn. 539 (1,863), contract had been been integrated:' integrated." Cobb v. Wallace, (1863), is a case in written ,was later supplemented which an oral contract contract for the hiring of a coal barge was supplemented by a written which the daily rental to be paid. This receipt receipt for the barge containing containing a statement statement of Ute receipt .as certainly was It certain1:,' antecedent oral agreement. integration" of the antecedent agrCCJ1lent. It was perhaps a "partial integration" substitute operating integration of that agrCCJ1lent operating in agreement or as a3 substitute not assented to as a complete integration discharge of it. discharge

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extrinsic evipartial integration integration does not prevent its own variation by e..xtrinsic evidence. In such cases as these, the court should be slow to find that the parties superseding docuparties have have' actually actually assented to the partial writing as a superseding ment. It may, indeed, even though partial, have great evidential weight as to the terms of agreement. But after establishing estaQlishing the fact that there is no complete complete integration of an entire contract, it must seem unlikely that that the parties meant the partial writing to be conclusive conclusive as to anything. Evidence That the Writing Was Not Assented to as a Complete Complete and Evidence mId Accurate Integration. I1~tegration. There are thousands thousands of cases in which courts have declared that parol evidence is not admissible to vary or contradict the contract.5G22 It is stated in the form of a rule of evidence evidence terms of a written contract. for the exclusion exclusion of offered offered testimony. In many of these cases, cases, however, the published published report report itself shows that the offered testimony was actutilly actuti11y there heard and its credibility weighed. In spite of it, the court finds that thel·e complete and accurate was a complete accurate integration in writing, and then justifies justifies its "parol evidence such decision by repeating repeating the Itparol evidence rule" rule" to the effect that su~h testimony testimony is not admissible admissible to vary or contradict contradict the writing." writing. GIl Having admitted and weighed the evidence evidence to determine whether whether there is such an integration in writing and having found that there is, that very evidence becomes evidence becomes quite immaterial for the purpose purpose of varying or contra52. The following cases illustrate supposed rule rule:: DeWitt v. Berry, 134 U. S. 306 illustrate the supposed (1890). (1890). The writing contained an express warranty that goods would be like those sold to a third party and also like a sample. The Court held that an additional oral warranty warranty of quality was not provable. Browning v. Haskell, Haskell, 39 Mass. 310 (1840), (1840), excluded e."\:c1uded oral testimony of a lessor, when when offered offered to show that she signed the lease under protest protest and in reliance on the oral promise of the tenant to e.\:ecute execute a lease on different terms within two days. This was 15 M. & & was not a case of conditional delivery. In Smith v. Jeffryes, 1S AV. 560, 153 Eng. Rep. R R. 972 (Ex., 1846), VV. 1846), a contract contract to deliver "ware potatoes," was shown shown by plaintiff's plaintiff's testimony testimony to mean the largest and best quality of three different qualities qualitles testimony of grown in the neighborhood. neighborhood. The court held that it was error to admit the testimony the defendant that the plaintiff plaintiff had said that the potatoes potatoes he sold were were "Regents "Regents ware" otatoes, and not "kidney wares." opinion justifying the decision. potatoes, wares." The court gave no opinion (1899), the plaintiff In Violette v. Rice, 173 Mass. 82, 53 N. E. 144 (1899), plaintiff was employed employed by an written contract in which she promised "to render render services services at any theatres," theatres," and "to conall the rules and regulations adopted by" the theatre form to aU theatre employer. Mr. Justice Holmes, speaking defendant HaImes, speaking for the court, refused refused to admit testimony testimony to show that the defendant had orally agreed to employ her in the part of Bertha Excelsior Bertha Gessler in a play called Excelsior Junior. The court believed believed that this testimony contradicted contradicted the terms of the writing writing Where a marine insurance "Swedish," oral testimony to ttl insurance policy represented a ship as "Swedish," "Swedish" to deceive show that it was in fact American, that it was described described as "Swedish" deceive the British who were insurer were then at war with the United States, and that the defendant insurer knew these facts, was held inadmissible: "There "There cannot be a usage, by which a warranty neutral should be held to mean mean that she was not neutral, neutral, but only prethat a vessel was neutral tended to be so." so." Lewis v. Thatcher, 15 Mass. 431, 431, 433 (1819). (1819). 53. No opinion can be hazarded, without careful reading of thousands of cases, as after to the proportion of them in which parol evidence was described described as inadmissible after some or all of it was heard and weighed. Such an extensive research research is not possible for for the purposes of the present article. The application of the "parol evidence rule" by the evidence rule"

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dicting the integration integration that supplanted supplanted and nullified it. It was material and was admissible on one issue; but the decision of that issue was that that the parties agreed to substitute one written integration integration for all their antecedent negotiations. Until this decision was reached, one one could not know that there had been such a substitution. The eyidence evidence may cle'lrly clearly show show former that there was no agreement to substitute the written contract for a former oral one, in which case an action for5 4breach of that oral contract contract is not not rule. G~ prevented by the parol evidence evidence rule. The fact that the rule has been stated in such a definite and dogmatic form as a rule of admissibility authorit)· admissibility is unfortunate. It has an air of authority and certainty that has grown with much repetition. 'Without Without doubt it has certainty deterred counsel from making adequate analysis and research research and from offering parol testimony that would have been admissible for many purposes. vVithout Without doubt, also, it has caused a court to refuse to hear testimony that ought to have been heard. The mystery of the written word is still such that a paper it paper document may close the door to a showing showing that it was never assented to as a complete complete" integration. No objection if e.xc1usion of the testimony if objection whatever can be made to exclusion the written integration is in fact what the court assumes or decides that If it is in fact a complete it is. If complete and correct integration of the terms on on which the parties antecedent understandings parties are agreed, all of their antecedent understandings and agreements are in truth merged in and discharged agreements discharged by the new written written agreement of the parties, an agreement that is as valid and effective effectiYe as reasons that are other contracts contracts and that can be avoided only for the same reasons avoid other contracts. In such a case, the offered testimony is indeed an attempt to prove something something that is totally immaterial. But in such a case, it is not the "parol evidence rule" that makes those facts immaterial; is immaterial; it is 5 the new integrated integrated agreement that has made them immaterialu immaterial.:';:; loc. cit. courts of North Carolina is shown in great detail in Chadbourn Chadbourn and McCormick, 10'. supra supra note 15. The authors indicate the impossibility impossibility of reconciling all the decisions. They also prove the extreme evidence e.'\.-treme liberality with which the courts have admitted admitted oral c,idcnce of antecedent bclieved that a similar similar antecedent agreements varying or adding to a writing. It is believed substantially I}' the same result. See, also, survey of the cases of the other states would shuw show substantial Hale, The Parol Evidellcc Evidence Rille, Rule, (1925) (1925) 40R. McNVilliams, The Parol ParolEviden'e Evidece 4 ORE. L. R~v. RF.\·. 91; 1fcWiI\iams, Ride in it California California (1919) R v. 417. Rule (1919) 7 CALIF. L. REv. (2d) 503 (C. 54. United States Nay. Nav. Co. v. Black Diamond Lines, 124 F. (2d) (C. C. A. A. 2d, 1942), cert. cert. denied, denied,315 U. S. 816 (19·m (1942) ;; Cobb Y. v. Wallace, 4S 45 Tenn. 539 (185S) 1942), (1~68) ;; Danielson Danielson v. Scandinavia, 201 Wis., 392, 230 N. \. 83 (1930). (1930). Y. Bank of Scandinavia, N. W. supposed rule is is a rule of substantive 55. A court may be aware that the supposed. substantive law and yet misapply it or else be in error as to what the rule actuall)' actually is. Sec See Pitcairn v. ". Philip Hiss Co., 125 Fed. 110 (c. (C. C. C. A. 3d, 1903), 1903), where three witnesses for the defendant, in an action for the price of completed completed work, testified testified that as the writing was signed the parties %as done to the "satis"satispa)'able unless the work was both agreed that the price should not be payable The' plaintiff plaintiff did not object object to the admission of this faction" of the defendant's defendant's wife. The" testimony but testified testified that it was not true. The court directed the jury to disregard disregard this substantive law made the oral agrcenlent agreement inoll~­ inoperatertimony, on the theory theory that a rule of substanti"e tive. But if the testimony was true, there was no agreed. agreed complete integration by which the complete integration agreement could be discharged. simultaneous oral agreement discharged.

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difficulty is that the court's assumption or decision as to the comThe difficulty pleteness and accuracy pletenes? accuracy of the.integration the, integration may be quite erroneous. The prove its own completeness accuracy. 0 Even though writing cannot cannot'prove completeness and accuracy.~o it contains an express express statement statement to that effect, the assent of the parties parties thereto must still be proved. Proof of its completeness and accuracy, discompleteness charging all antecedent agreements, must be made in large part by the antecedent oral testimony of parties and other witnesses. The very testimony that evidence rule" the "parol evidence rule" is supposed to exclude is frequently,.if frequently"if not always, necessary before the court can determine determine the completeness and accuracy accuracy of the integration. The evidence that the rule seems to exclude must sometimes be heard and weighed before before it can be excluded by the rule.U rule. tiTT This is 56. Wigmore correctly says: "the conception conception of a writing as wholly and intrinsically intrinsically parties' intent to make it the sole memorial of one or seven or or self-determinative self-determinative of the .parties' twenty-seven subjects WIOGMoRa, EVIDENCE, EVIDENCE, § 2431. 2431. subjects of negotiation is an impossible impossible one." one." 99 WIGMORE, §2400(5). Nevertheless, Nevertheless, there are many cases in which the comTo the same effect, id. id. §2400(5). completeness and accuracy accuracy of the writing as an agreed integration integration is assumed assumed by the court after what seems to have Thompson v. Libby, have been a mere inspection of the writing. In Thompson (1885), the court court said: "The only criterion criterion of the complete34 Minn. 374, 26 N. W. 1 (1885), ness of the written contract as a full e.-..:pression expression of the agreement agreement of the parties is the written contract writing itself." itself." Id. /d. at 377, 26 N. W. at 2. And see see in accord, accord, Robbs Robbs v. Illinois Rural Rehabilitation Il1. App. 418, 40 N. E. (2d) (2d) 549 (1942) v. (1942);; Cargill Cargill Comm. Co. 'V. Rehabilitation Corp., 313 Ill. Swartwood, 159 Minn. 1,198 1, 198 N. W. 536 (1924); Swartwood, (1924); Dawson County State Bank v. 'V. Durland, Durland, W. 243 (1926) Ferguson, 111 Neb. 691, 691, 197 N. W. 390 114 Neb. 605, 209 N. W.243 (1926);; Davis v. F,erguson, 390 (1924) ; Sund v. Flagg & & Standifer Ore. 289, 168 Pac. 300 (1917); (1917) ; Coal River Col(1924) Standifer Co., 86 are. lieries v. Eureka Coal &Wood Co., 144 Va. 263,132 263, 132 S. E. 337 (1926) (1926) ; Braude Braude & &McDonnell, McDonnell, Inc. v Cohen Co., 87 W. Va. 763, 106 S. (1921). S. E. 52 (1921). In Naumberg v. Young, 44 N. J. Law 331 (1882), (1882), the court said: "The only safe criterion of the completeness completeness of a written written contract contract as the full expression expression of the parties' agreement agreement is the contract itself itself.... .. If the written written contracts purport to contain contain the whole something has been left out OUt agreement, and it is not apparent from the wriing itself that something to be supplied supplied by extrinsic e.-..:trinsic evidence, evidence, parol evidence evidence to vary or add to its terms is not admissible." Id. /d. at 339. But see 9 WIGMORE, WIGMORE, EVIDENCE, EVIDENCE, § 2431: "Such "Such a proposition, proposition, howpractice, it is not enforced by its ever, is untenable, both on principle principle and in practice. In practice, advocates." theoretical advocates." 57. 9 WIGMopR, (2), reads as follows: "Thus the apparent WIGMORE, EVIDENCE, EVIDENCE, § 2430 (2), apparent paradox paradox determine whether to is committed committed of receiving proof of certain negotiations in order to determine exclude them; and this doubtless has sometimes sometimes seemed to lower the rule to a quibble. are negotiations arc But the paradox paradox is apparent only. The explanation is that these alleged negotiations reclte received only provisionally. Although in form the witnesses may be allowed to recite afterwards treated as immaterial immaterial and legally void, the facts, yet in truth the facts will be afterwards applicable." if the rule is applicable." It should be observed that the testimony It testimony here referred to is not admitted "provisionally" "provisionally" and afterwards applicable." Like any other evidence, it is adaftenvards excluded excluded "if the rule is applicable." whether the offered writing was mutually assented complete mitted on the issue of whether assented to as a complete integration. On that issue it is admitted and it stays admitted, whatever the court's court's decision on that issue. But if, in spite of the received testimony, the court finds that the writing was mutually mutually assented to 'as a complete complete integration, it thereby finds that the negowriting to'as tiations testified testified to were discharged discharged and nullified nullified by the parties themselves, themselves. Could the court excluded it as court have known this, without first hearing the testimony, testimony, it would have excluded immaterial. Wigmore's this, Wi~ore's whole discussion is in harmony with this.

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one reason why the working working of this rule has been so inconsistent and unexceptions and limitations satisfactory. This is why so many e.xceptions limitations to the supposed rule of evidence have been recognized by various courts. There is ample judicial authority authority showing that, in determining determining the extrinsic to issue of completeness completeness of the integration integration in writing, evidence e:-..-trinsic the writing itself is admissible. The oral admissions of the plaintiff plaintiff that that the agreement agreement included matters matters not contained contained in the writing may be proved proved to show that it was not assented to as a complete integration, integration, however however IlB On this issue, parol testimony is cercomplete it may look on its face." face. tainly admissible to show the circumstances circumstances under which the agreement agreement executed.c0 This was made and the purposes for which the instrument instrument was e.xecuted.lJ'J is admitted, even by a court that has asserted the writing itself to be the sole criterion.' criterion.61l It would have been better had no such rule ever been stated as a rule introduction of testimony. Instead, attention should be preventing the introduction called to the accepted accepted rule that parties parties can by a substituted contract discharge and annul any and all of their previously made contracts. The question may then be put: Have the parties in the instant case made such a substituted contract? On this issue of fact, no relevant testimony should AUt. 793 (1926). (1926). 58. Ward v. Zeigler, 285 Pa. 557, 132 Atl. J. I. Case Threshing Mach. 59. ].1. Mach. Co. v. Buick Motor Co., 39 F. F. (2d) (2d) 305 (C. (c. C. A. A. 8th, 8th, 58 (1929); (1929); Brosseau v. Jacobs' Ati. S8 1930) ; Pyskoty v. Sobusiak, 109 Conn. 593, 145 Atl. 1930); More, 195 ~{jnn. Minn. 443, 263 (1917); Taylor v. Marc, Pharmacy Co., 147 Ga. 185, 93 S. E. 293 (1917); 443, 2G3 Pharmacy (1917). Ore. 289, 163 16S Pac. 300 (1917). N. IV. W. 537 (1935); (1935); Sund v. Flagg & Standifer Standifer Co., 86 Orc. NV. S3 83 (1930), In Danielson v. Bank of Scandinavia, 201 Wis. 392, 230 N. W. (1930), the court court Wisconsin cases stated: "There is language language used in some prior prior 'Visconsin cases which would indicate transaction must be deterthat whether a writing deterwriting amounts to an integration of the entire tran..":lction other itself ..... .• However, mined solely from the writing itself. However, a careful analysis of these and other cases considering whether or not the writing in question was intended cases indicates indicates that in considering subject-matter and surtrantsaction, tlle the subject-matter by the parties to be an integration integration of the tlle entire tra\1saction, NV. circumstances may and should be taken into consideration." Id. ld. at 397, 230 N. \V. rounding circumstances at 85. complete excellent c.....ample example of a case in which An c.'>:cellent which a written document looked looked like a complete integration, oral testimony testimony not to be so, is Curlee Clothing Co. v. .... integration, but was proved by oral 1925), discussed snpra note 21. WV. (Tex. Civ. App. 1925), Lowery, 275 S. 'V. 730 (Tc.,,discussed supra 21. See also UtahTax Commission, (2d) 974 (1937). Commission, 93 Utah 406, 405, 73 P. (2d) (1937). Idaho Sugar Co. v. State Ta.'>: Navigation Co. v. Black Diamond Lines, Lines, 124 Another excellent c."cellent case is United States States Navigation oral con1942). The written contract embodied part of a former omI F. (2d) 508 (C. (C. C. A. 2d, 1942). protest that express prutest writing was signed signed under c."prcss tltat rights tract and omitted another part. The writing not It was rightly held that the writing was not under the oral contract were reserved. It executed as a complete substitution and discharge; discharge; and either parol or written evidence e\idencc was admissible to prove that it was not. completeness of the written con60. "The true rule is that the only criterion criterion of the completeness conin expression of the agreement of the parties tract as a full c."pression parties is the writing itself; but, in complete, it is to be construed, construed, as in any other case, acacdetermining whether whether it is thus complete, purpozes for cording to its subject matter, and the circumstances circumstances under which and the purpo£cs Noye Mfg. Co., 66 65 Minn. which it was c."ecuted." Roller-Mill Co. v. John T. Noye executed." Wheaton RoUer-Mill 156, 156, 160, 160, 68 N. W. 854, 855 (1896). (1896).

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should all be observed and weighed with the clear and critibe excluded; it should experience. This is what the wiser courts, courts, seeking justice in in cal eye of e..'change, bonds and mortgages, are often only means of satisfying satisf:,ing contracts for the sale of lands or goods, of which conveyances con\"e)'3I1ces and bills of parcels, PJ.rcels, with land counterpart. Yet many writings, such as agreements for the sale of hnd receipts, are the counterpart. establishing houses or other or erection of houscs other improvements, improvements, or for partnerships, partnerships, or for cstablisWnr: permanent relations, are generally generally designed to express c.,-prcss the whole whole inother important or permanent tention of the parties. exclusive of oral written instrument is exclusive "In order to be able to declare ''In declare how far a ,-nittm testimony, it is essential essential to ascertain ascertain its purpose. It is the purpose purpose of a convey-ance cunveyancc to

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one New York case,70 case,7" we are told: "The trial judge ruled that one In one excluded of the documents in evidence was as matter of law a contract, and excluded all conversations at the time of signing or before, though admitting those all that followed. He thus held for the plaintiff, except that he left to the the jury the assessment of the damages. The Appellate Division ruled that as complaint." The matter of law there was no contract, and dismissed the complaint." Appellate Division Court of Appeals held that both the trial judge and the Appellate inforwere wrong. In an opinion by Judge Cardozo, we are given some infor~ the supject subject matter, and the preliminary oral and mation about the parties, ~he docuwritten communications. It then proceeds thus with respect to the docu~ repeating ment before the court: "It is dated July 14, 1919. It begins by repeating the list of prices offered in the letter. Having thus confirmed the schedule, it states these new provisions: 'All prices are made for a period of six six (6) months, week commencing Aug. 1, 1, 1919, and terminating week end~ end(6) ing Feb. 1, 1, 1920, after which time they will be subject to change. It is understood that no less than 300 doz. per week should be sent in by either either party. It is understood that we pay freight only on the work sent out from here, namely, Lehighton or Mauch Chunk. No extra charge for button holes in facing sleeves. Plain sleeves less .12 .12 per doz. Bills must be paid upon receipt of B/L.' The writing is subscribed subscribed both by plaintiff and by defendants." declare its declare the transfer of a title; of a lease, to pass a leasehold interest and dcclare its terms; of articles of partnership, to institute the relation relation and define the rights and duties of each; of a bond, to acknowledge an existing e:.dsting debt; of an assignment, assignment, to pass the title title of the thing assigned. the special purpose for which a written "As effective of the' written instrument is executed, the writing, when there is no legal or equitable objection to its validity and completecompleteness, is exclusive e.- Abernethie's contradict the terms of the writtestimony in this case did not contradict The oral testimony unconditional written promise contradiction to show that an unconditional ing, unless it is contradiction conditional upon an event unexpressed unexpressed in the writing. The was in fact conditional doCument complete intedocument was clear and unambiguous. Apparently it was a:a complete or incompleteness or gration. Inspection Inspection of the document would show no incompleteness defect. Its legal effect was clear clear and definite. Yet the document was not 1856). Similar & B. 88. pym Campbell, 6 E. & B. 370, 119 Eng. Rep. R. 903 (Q. B. 1856). Similnr Pyre v. Campbell, party: of a third pnrty: cases in which the contract was, by parol, made conditional on approval oI Mankin v. 1921) (sealed writing conditional on ap(C. C. A. 4th, 1921) 277 Fed. 960 (C. v. Bartley, 277 (1905) (order to be Chaffin, 136 N. C. 350, 48 S. E. 768 (1905) proval of an attorney) ; Pratt v. Chaffin, (1894), a conS 228 (1894), binding only if partner approved). approved). In Burke v. Dulaney, 153 U. S. should have an tract of employment was made, in which it was agreed that the employee should interest in the prQperty property at aa specified price, if after inspection he should want it. The emnot to the price. Later he decided not for the ,ployee thereupon delivered his promissory note for to Q."{c1udc exclude take the In aa suit on the note by the payee, it was held error to the property interest. In proof of the parol agreement. Here, Here, it is to be observed that there was aa perfectly valid an irrecompensation, and an contract the parties, including employment at agreed compensation, contract between the comof the comvocable option in in the employee to buy property. This option to buy was part of work. his work. pensation for his pensation that with that identical with not identical analysis isis not the analysis 2410, where the EvIDENcE, §§2410, 89. See WIGmoa-, EVIDENCE, See 99 WIGMORE, perforspecific perlorrecognized; and where specific fully recognized; is fully given here. That contract exists is That aa valid contract before the third party has be decreed decreed even before mance is otherwise aa proper remedy reriiedy itit may be A. C. A. (2d) 340 (C. C. Bros. Transp. Co. v. Jaffa, 143 Fd. (2d) Watson Bros. See Watson expressed approval. See expressed 2d, . 2d, 1944). 1944).

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in fact a complete complete integration integration and the establishment establishment of the additional additional term tenn by oral testimony altered this legal effect very materially. Suppose that A writes out the terms of an agreement and signs it. He B,3 with then delivers it to B with the oral statement, "This "This is to be operative operative as an offer to you, and you are to have the power of acceptance, only in case document and atevent X happens." happens." X never happens; but B signs the document enforce it as a formal fonnal contract. In this example, in truth, no tempts to enforce ..contract contract has been made; and the facts showing there is none may be statement is admissible, proved testimony. 0 Proof of A's proved by parol testimony.DO A 3 s oral statement not to show that a written contract was subject to an orally expressed e.",pressed condition, but to show that B never had power to make a contract by acceptaccepting. A's delivery to B did not deprive A of the power of revocation. The happening happening of event X would not in itself consummate consummate a contract; a new expression eA-pression of assent by B would be necessary. In each of the two cases just stated and compared, the document document sued on looked like a completely integrated contract. In each of them the same If the testimony e..",isted that the offered offered testimony was false. If possibility existed was true, then in neither neither case was the document document a complete and accurate "parol evidence rule" would have done integration, and application application of the "parol nonapplication serious injustice. Injustice might also have resulted from nonapplication of the rule if the evidence, though actually false, had been admitted and and believed; believed; but in such a case since the evidence was offered to show only that the promises of both parties were alike conditional conditional upon the same event, the injustice would have consisted profit consisted merely in the loss of the profit quo.Y'1 of the contract. The two parties would have been left in stats stal" quo.0 • 43, 125 N. E. 605 C05 Massachusetts Biographical Biographical Soc. v. Howard, 234 Mass. 90. In 1fassachusetts Mass. 4..~, (1920), a signed and delivered document was orally agreed at the time not to be operative (1920), operative election. Here as a contract contract until the signer should later send notice of his clection. Here no contract, contract, was wvras yet made, and the subsequent making of a contract ' conditional or otherwise, was conditional only as wholly subject subject to the will of the defendant. The entire transaction was operative onI:,' defendant an offer by the plaintiff (the (the party party holding the document), document), with a power in the defendant (the (the signer) signer) to accept accept by notice. notice. Without doubt the parol evidence that w-as was offered offered here excluded by Ule the "parol evidence rule." should be subjected to severe scrutiny; but it is not e.xcluded e..idence rule." The non-existence non-e.xistence of a contract could certainly not be discovered by inspection of the document. written contract Eq. 245, 140 At. involved a '\';ritten 91. Cohen v. Colm, Cohn, 102 N. J. Eq.245, 91. AtI. 319 (1928), (1928), invoh'ed contract p'rice had been paid. In a suit for specific perfor the sale of land for part of which the price formance against against the vendor, he offered to prove orally that he was not to convey convey the land if he became reconciled to his children, children, who were then estranged. The court excluded e.xcluded the offered evidence on the ground that its purpose was to alter or vary ,oary the terms of the (IM2) ; existing written e.xisting written contract, citing the case of Naumberg v. Young, 44 N. J. Law 331 (1~); "The "The effect of these decisions decisions is to hold that parol evidence is not admissible which, conconthat it was ,-as at one time existence and delivery ceding the e.xistence delivery of the written written contract, and Utat time efshoving that it is to fective, seeks to nullify, modify, 6r or change the tile obligation obligation itself, by sho\~ing effective or is to have an effect different cease to be effective different from that Utat stated therein, upon certain varies or contradicts the terms of the future contingencies contingencies or conditions, for such SUcll evidence ,oaries the

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Even though the analysis of the basis of decisions admitting admitting testimony that the deciit does not follow to show a parol condition is erroneous, erroneous, sions should not be approved. The decisions are numerous and generally followed. Moreover, the refusal to admit testimony to prove the parol precedent would do far more harm than good. 922 The testimony, condition precedent if believed, demonstrates that the writing was not a complete complete and accurate operative with respect integration. integration. And the condition, operative respect to all the promises in the contract contract alike, is one that prudent persons often do not think to put into the written instrument. Often a written contract is delivered delivered to a custodian custodian in escrow, to be contract on the happening other party to the him to the by further delivered happening No one doubts that such contracts may be valid and of some condition. Noone irrevocable long before the condition happens. There There is no doubt also 61 3. Eq. 177, 61 writing." The court distinguished writing." distinguished OBrien O'Brien v. Paterson Paterson Brewing Co., Co., 69 N. J. Atl. 437 (1905), (1905), because in that case there was never an effective contract. The court court said: said: "The rule excluding parol evidence "The evidence has no place in any inquiry, unless the court has before it paper beyond question binding binding and effective, and hence parol evidence evidence some ascertained paper instruis admissible to show conditions relating to the delivery and taking effect of the instru~ contingencies, for ment, as that it shall only become effective effective upon certain conditions conditions or contingencies, for this is not an oral contradiction contradiction or variation of the written instrument, but goes to the ever very existence of the contract, and tends to show that no valid and effective contract ever existed." existed." Here, the court clearly clearly saw saw that the oral proof that was offered did not show apexclusion of the testimony should not be ap· that no contract contract had been made. But the e.'Cclusion thit many courts admitting admitting such testimony testimony have made an erroneous proved. The fact that felt analysis does not invalidate invalidate their decisions. They They rest on sound policy, instinctively felt by the judges. & Contracting Engineering & contra. See United 92. There are apparently apparently some cases cOlllra. United Engineering Contracting Co. v. Broadnax, 136 Fed. 351 (C. (c. C. A. 2d, 1905); 1905); New Prague Flouring Flouring Mill Co. v. Hewitt Hewitt N. J. J. (1924) ; Cohen v. Cohn, 102 N. Grain & & Provision Co., Co., 226 Mich. 35, 196 N. W. 890 (1924); Pac. (1928) ; McClintock v. Ayers, Eq. 245, 140 140 AtI. Atl. 319 (1928); Ayers, 36 Wyo. 132, 253 Pac. 658, 255 Pac.' (1927). 355 (1927). , conveyance It has often been held, though the better rule is otherwise, It otherwise, that if a deed of conveyance is signed in unconditional form and delivered to the named named grantee, rather than to a third person as an escrow, it can not be shown that the delivery delivery was made made subject to a condicondigrantor (1896) (holdIng (holding that a grantor v. White, 160 Ill. 605, 43 N. E. 729 (1896) tion. See Stanley v. could not show that he delivered delivered the deed "not to be operative operative unless signed by all the (1931) ; heirs") ; Commercial heirs"); Commercial State Savings Savings Bank v. Bird, 254 Mich. 418, 237 N. N. W. 57 (1931); (1908) j; Totten v. National Ben Franklin 18, 116 N. W. 544 (1908) Franklin Wipfler v. Wipfler, 153 Mich 18,116 Tex. J.Eq. 354, 160 Fire Ins. Co. of Pittsburgh, 110 N. N. J. 160 Atl. 572 (1932) (1932) ; Holt v. Gordon, 107 Te."'. S.W.1097 W. 1097 (1915). (1915). Contra, 137,174 S. 137,174 COilIra, Brown v. Cabell, 111 W. Va. 186, 161 S. E. 438 (1931), (1931), inwhich delivery.of in delivery.of a deed on condition that it was to be effective only in the event that the & evidence;j Whitaker Whitaker & vendee secured a long-term loan was allowed to be shown by parol evidence 224 Fowle v. Lane, 128 128 Va. 317,104 317, 104 S. S. E. 252 (1920). (1920). Cf. Hotaling Hotaling v. Hotaling, 193 Cal. 368, 368,224 (1924) and similar cases, cases, allowing parol evidence evidence to show Pac. 455, 56 A. L. R. 734, 746 (1924) notwithstanding the manual the lack of intent necessary necessary to constitute constitute a valid delivery, notwithstanding E. 680 (1894) Ill. 493, 38 N. E. tradition of the deed. See also Rountree Rountree v. Smith, 152 III. (1894) ;; Buchwald Buchwald 103, 199 Ati. Atl. 800 (1938). v. Buchwald, 175 Md. 103, (1938).

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that parol evidence evidence is admissible admissible to prove the extrinsic extrinsic condition condition on which promisee."tl3 The the document is to be delivered by the custodian custodian to the promisee. latter's rights are conditional on that event, even though though there there is no intimation to that effect in the written document. It has often been said that there is a distinction between between a "conditional "conditional It delivery" conditional; delivery" of a written written contract contract and a contract contract that is itself conditional; that oral proof of the conditional proof conditional delivery is admissible, admissible. but oral proof conditional is not admissible., admissible.M This that the contract itself was agreed to be conditional subject to a parol difference is an illusion. To deliver a written contract subject condition has identically identically the same meaning and effect effect as to deliver unconditionally a written contract contract that by its own terms makes all the promises therein conditional. Courts have also thought that the admissibility of admissibilit)· of the testimony depended on whether the condition is precedent or subsesubsedifference between quent without noting the difference between a condition precedent precedent to the formation of a contract contract and a condition precedent to the duty of immeprecedent imme5 5 diate performance performance of a contract contract already made. made.o In a Connecticut case, involving involving a written written acceptance acceptance of a bill of exchange, it was orally agreed agreed that "it should not become become obligatory obligatory upon upon ...[the acceptor] to pay the same until ::Mills Mills (the completed the ... (the drawer) drawer) completed house and said sum became became due him." him." It was held that evidence of this oral agreement agreement should not have been admitted. The court said: "The


93. Shire Kan. 690, 213 Pac. 159 (1923); Shire v. Farmers' Fanners' State Bank, 112 Ran. (1923); Fulton v. Priddy, 123 Mich. 298, 82 N. W. 65 (1900) (1900) ;j Conner v. Helvik, Mont. 437, 73 P. (2d) Hcl\"ik, 105 ~lont. (2dj 11cDaniel, 131 Neb. 639, 269 ~. N. W. 3S0 (1936) ;j Manning 541 (1937) (1937) ;j McDaniel McDaniel v. McDaniel, 380 (1936) ~ranning v. Foster, 49 Wash. 541, (190S). 541, 96 Pac. 233 (1903). 1932);j Hills 94. See American American Surety Co. v. Egan, 62 F. (2d) (2d) 223 (C. (C. C. A. 6th, GUI, 1932) Sav. 281 (1927); (1927) ; Hudson State Eanl~ Bank v. Say. Bank v. Hirt, 204 Iowa 940, 216 N. NV. W.281 \'. Haile, (1930). 130 Ran. 322, 286 Pac. 228 (1930). 95. In Barret v. Clarke, 226 Ky. 109, 9 S. W. (2d) (2d) 1091 (1928), (1928), the suit %%as was on a note given to a broker for commission maker commission for selling the maker's maker's property. The maher note was to be p'aid only claimed that it was agreed between between him and the broker that the Mte hI: paid anI:; the deed and made their P3}"m(lUts paylments in the event the purchasers purchasers of the property property accepted tlll: mad\:: th\::ir It was held that these were conditions subsequent as they were supposed to. It subsequent to the execuc:"ccution of the note and could not be shown shown by parol evidence. The court distinguished distinguished bztw;cen blll"icen conditions conditions precedent and subsequent, subsequent, saying: "If "If there tllere is a contingency conting(lUc,)' attached attached to the delivery not pass delivery of the note, such is precedent preced(lUt to its taking effect effect and title does dll\:lS 1I0t P:lSS until such proviso is satisfied. Parol prove such conditional Parol evidence eyidence is admissible admissible to proye conditional delivery. dcli\"er}·. But if the contingency relates to matters arising subsequent subsequ(lUt to the execution e."ecution of the note, payment, such arc are conditions that is, superimposes superimposes additional stipulations stipulations as to its paym(lUt, conditions subsequent, and parol eyidence evidence is clearly not admissible." admissible" ld. Id. not at 115, NV. {2d) (2d) at IG9·t 1694. 115, 9 S. W. The condition here was exactly PFy: 'V. v. Campbell, e.'\."3.ctly the same in kind as was that in P~;m Campbell, discussed text;j it was a condition precedent to the duty to pay the note. See alEO also Lincoln cussed in the te."t v. Burbank, 218 Ky. 89, S9, 290 S. W. 1031 (1927) Minn. 419, W. 1031 (1927) ;j Skelton v. Grimm, Grimm, 15G 1SG ~linn. 41!J, 195 (1923); Jamestown Jamestown Business College Ass'n v. 64 X. N. W. \Y. 139 (1923); ". Allen, 172 N. Y. 291, IH X. E. 952 (1902) (1902) ; Helmnke S.W. IV. (2d) (2d) 463 (Te.". (Te.m. Civ. App. 1929) 1929) ;j Tripplchom Tripplehorn ..... v. Helmke v. Prasifika, Prasifka, 17 S. Ladd-Hannon (Tex. Civ. 1928), crror dismisscd, 118 118 Ladd-Hannon Oil Corp., 8 S. NV. W. (2d) (2d) 217 (Te.". Ch'. App. 192&), error dismissed, Tex. 195, 13 S. N. (2d) 666 (1929). (1929). Te.,,S. W.

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acceptance sued upon is in writing and is an absolute and unqualified unqualified one conditional one. It is well settled that in an action as distinguished from a conditional action at law such an acceptance acceptance cannot cannot be cut down to a conditional one even by agreement to that effect." effect." 90 00 the clearest proof of a contemporaneous contemporaneous oral agreement It may be that in this case there was a fully integrated contract, concontract, I* sisting of the bill of exchange with the written unconditional unconditional acceptance on its face. It is clear that the acceptor acceptor was trying to show by parol evidence that his obligation or legal duty was conditional instead of absoevidence extrinsic parol lute-that his duty as acceptor acceptor of the bill was subject to an e."{trinsic condition. The immateriality of this evidence should not have been apacceptance on the face of the parent until the court found as a fact that the acceptance bill was mutually proved mutually assented to as a complete ~omplete integration. integration. This is not proved by the face of the instrument alone. Evidence That One Promise it" a Contract Contract Is Conditional Ev£dellce That Promise 11' Conditional Upon UpOH a RcRr:turn Performance: Performance: Failure Failure of Consideration. Consideration. A bilateral tum bilateral written contract consists of the exchange of reciprocal written promises. Either or or both of these promises may be dependent or independent. One of them is dependent if it is conditional said to be dependent conditional upon the performance performance or tender of of performance of the return writing performance return promise. Frequently, however, the writing says nothing of such a condition condition as this. In form, the promise is wholly wholly independent and unconditional. unconditional. independent For two centuries or more, after after bilateral bilateral contracts were recognized, the common law courts held that the reciprocal promises were independent independent unless they were e."Pressly expressly made conditional. conditional. This was later reversed reversed by the courts. Evidence was admitted to show that the parties contemplated contemplated an exchange exchange of performances, performances, as well as an exchange of promises. The defendant defendant could show that his promise promise was impliedly conditioned conditioned on performance of the agreed exchange exchange by the plaintiff. The present writer has seen no case in which the "parol evidence evidence rule" was held to prevent prevent proof of an oral agreement that the defendant's defendant's promise should be thus conditional. Instead, non-performance non-performance by the plaintiff is called "failure "failure of consideration," sideration," and oral proof of such failure is not prevented prevented by the "parol evidence rule." Indeed there are many cases allowing the defendant to evidence rule." prove that the plaintiff made an oral promise promise in return, and to show show that its nonperformance was a "failure of consideration." U" nonperformance "failure consideration." U7 & Smith Lumber (1899). 96. Burns &Smith Lumber Co. v. Doyle, 71 Conn. 742, 43 Atl. 483 (1899). 97. See the following cases: Lewis Publishing Co. v. Henderson, Henderson, 103 Cat. Cal. App. 425, 284 (1930) ; Kaylor 284 Pac. 713 (1930); Kaylor v. Bolton, 48 Ga. App. 670, 173 S. E. 191 (1934) (1934);; Rothbaum v. Levy, 195 Ill. App. 246 (1915); Asgn, 246 Mich. 225, 224 (1915); Sharrar v. Wayne Wayne Savings Ass'n, N. W. 379 (1929); (1929); American Agricultural Chemical Co. v. Griffin, 202 N. C. 812, 164 Ati. 683 (1934); (1934) ; People's Trust S. E. 577 (1932) (1932) ; Early v. Huntley, 315 Pa. 382, 172 Atl. Trust & & Savings (1937). In a suit for restituSavings Bank Bank v. Wassersteen, 226 Wis. 249, 276 N. W. 330 (1937). tion, cancellation of a written contract, on the ground of failure of consideration, consideration, tion, or for cancellation oral is admissible show that the promised admissible to to show that the promised performances performances were not understood understood oral evidence evidence is

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Proof that the defendant's written promise promise is dependent dependent and conditional does not show that a contract was never made; made j yet, it changes materially the legal effect of the written promises. Here, too, it may be possible to contract show that the real agreement agreement was for the making of a unilateral contract defendant's written promise was to be no more than a revocable revocable and that the defendant's performance rendered by the other party. offer until actual performance reciting Suppose that a document is signed and delivered by A to B, reciting consideration of a stated sum of money, receipt acknowlreceipt whereof is aclmowIthat in consideration edged, A promises promises to deliver specified goods. The "parol uparol evidence rule" is is held not to prevent document proving by oral testimony that this document prevent A from proving was delivered as an offer only, that acceptance was to consist only of of actual payment of the stated consideration, and that the money had never never been paid." shows the non-existence non-existence of paid.9s The offered evidence, if true, show's any contract, but it directly contradicts the statements in writing. In like manner, parol testimony is admissible to show, when when there are no express words of dependency eA-press dependency or condition, that a promise in a written written contract is not dependent and conditional upon the performance of a return promise. If If a vendor promises to convey by a specified specified date these words would be contradicted contradicted by parol testimony that he promised only to convey contradicwithin a reasonable time or by a later date. But there is no such contradiction by parol testimony that the purchaser's conpurchaser's promise to pay was not COn13 :) Suchditional on conveyance conveyance by the vendor within the specified time. timefa Suchtestimony merely shows the degree of importance that the parties atperformance on time. If the writing provides in clear language tached to performance that time shall be "of the essence" essence" and that one promisor's duty shall be conditional conditional upon performance by the other within within the exact time specified specified agreement that conveyantecedent agreement in the contract, parol testimony testimony of an antecedent ance within a reasonable satisfactory reasonable time, or within a longer time, would be satisfactory is irrelevant so long as the validity of the writing is not attacked. The exchange. Such proof as this invalidate to be equivalents or to be an agreed e."challge. tlus does not invalidate the contract or deny that each each promise was the consideration for the other. It shows, however, that the promises promises are not mutually dependent and conditional, conditional, with the result result that failure of one party's performance performance does not necessarily entitle the other party to 331, 187 N. X. E. 65, 89 A. L. L RL N. Y. 331, R. discharge or to restitution. Hutchison v. Ross, 262 N. 1007 (1933). 98. Bultman v. Frankart, 194 Wis. 296, 215 N. W. 432 (1927). (1927). Bultman v. & Eq. Co., 131 99. Alabama Const. Co. v. Continental Continental Car & 131 Ga. 365, 365, 62 S. E. 160 160 (190); Thurston (1876); Browning v. Huff, 204 Ky. 13, 13, 253 263 (l908); Thurston v. Arnold, 43 Iowa 43 (1876); S. W. IV. 661 (1924). (1924). Parol testimony is also admissible to show a contrary contrary intention that that performance exactly e.~ctly on time was of vital importance, and that the other party's promise should be held to be conditional exact performance, are no conditional on such e.~ct performance, even though there arc express words to that effect. Quinn v. Roath, 37 Conn. 16 (1870) (1870) Van Winkle & Co. eA-press Co. v. Waeks, 30 Minn. Minm. 335, 15 N. (1838);; Austin v. Wacks, N. IV. W. 409 Wilkins, 81 Ga. 93, 7 S. E. 644 (1888) (1883) 1156, 20 S. W. (2d) (2d) 650 (1929); (1929) ; King v. Ruclanan, Ruclman, (1883) ; Wimer v. Wagner, 323 Mo. 1156, Smith, 8 S. D. 407, 65 20 N. J. Eq. 316, 354 354 (1869). (1869). Contra and erroneous: Strunk v. Smith,8 S. D.4Q7, (j{) N. W. 926 (1896). (1896).

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same is true if if the the contract expressly provides provides that that the vendor vendor shall have same "a reasonable time" within which to make conveyance; parol testimony testimony "a reasonable time" within which to make conveyance j parol that the purchaser's purchaser's duty duty was understood to be be conditional upon upon conveyM conveyance within.a within.a specific specific period would contradict the the writing writing and and would would be ance 00 irrelevant so so long as the the validity of of the the writing is not attacked.10o irrelevant The writing, if if not attacJ,