Also known as: extrinsic evidence bars · parol evidence rule
Written by attorneys — see sources below.
A rule of substantive contract law that renders inoperative prior agreements, whether written or oral, to the extent they contradict or add to the terms of a completely integrated writing. The determination whether an agreement is integrated occurs as a preliminary question for the court.
Emmett Egan signed a detailed subscription agreement with Elysium Media for cloud services priced by monthly active users. The writing contained an integration clause and appeared complete on its face. When Egan later offered negotiation emails to show the parties meant to exclude free trial users from the pricing metric, the court first examined the writing's completeness and specificity to decide whether it was integrated before considering the emails.
Edith Eberhardt and Eastern Electric executed a forty-page supply contract that fixed price, set maximum capacity, and included an integration clause. Eberhardt sought to enforce an earlier oral promise for interconnection funding that the writing never mentioned. Because the court had already classified the writing as completely integrated, the extrinsic evidence of the oral funding commitment was excluded.
In May 1930 the Van Sweringen Corporation issued $30,000,000 in notes under an indenture naming Guaranty Trust Co. of New York as trustee with power to enforce noteholders' rights. In October 1930 Guaranty and other banks advanced large sums to companies affiliated with the Corporation and controlled by the Van Sweringens. When the Corporation could not meet its obligations, Guaranty participated in an exchange plan under which noteholders could surrender their notes for cash equal to 50 percent of face value plus twenty shares of Van Sweringen stock per $1,000 note; the offer remained open until December 15, 1931. In 1934 respondent York received $6,000 of the notes as a gift from a donor who had not accepted the exchange offer. In April 1940 three accepting noteholders filed the Hackner suit in federal court charging Guaranty with fraud and misrepresentation in connection with the exchange. York's motion to intervene was denied, and summary judgment for Guaranty was affirmed on appeal. On January 22, 1942, after her exclusion from the Hackner litigation, York filed the present class action in the United States District Court for the Southern District of New York on behalf of non-accepting noteholders. The complaint, resting exclusively on diversity of citizenship, alleged that Guaranty had breached its trust by failing to protect noteholders' interests when it assented to the exchange offer and by failing to disclose its own self-interest. The district court granted Guaranty's motion for summary judgment on the authority of the Hackner decision. The Circuit Court of Appeals reversed, holding that a federal court sitting in equity is not required to apply the New York statute of limitations that would govern an identical suit in the New York state courts. The Supreme Court granted certiorari.
View caseThe court decides as a preliminary question before interpreting the contract or applying the parol evidence rule.
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No. Prior negotiations remain admissible to explain the meaning of an undefined term even when the writing appears integrated, so long as the evidence is not offered to contradict or add new terms.
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The omission can rebut the presumption of integration. A short writing that leaves out substantial negotiated protections is less likely to be treated as the parties' final expression of their entire agreement.
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Yes. Evidence that the parties discussed additional material terms before signing can establish that the writing was not adopted as a final and exclusive statement, preventing application of the bar.
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…The Borderland of Hearsay, 39 Yale L.J. 489 (1930). : Dallas County analogizes the hearsay rule to such rules as the parol evidence rule ( Patterson-Ballagh Corp. v. Byron Jackson Co. , 9 Cir., 1944, 145 F.2d 786; Long v. Morris , 3 Cir., 1942, 128 F.2d 653, 141 A.L.R. 1041), privileges ( Munzer v. Swedish American Line ,…