Contracts - SOF & Parol Evidence (PE)

Writing required

—memorandum must:

1. Be in writing

2. Be signed by party to be charged (i.e., any authentication that identifies party)

3. Contain essential elements of deal

Types of contracts within SoF

1. Marriage—any agreement in consideration of marriage

2. Suretyship—contract to answer for debt or duty of another

3. One year—contract that cannot be performed within one year after contract is made

4. DE Point of Law—LLC agreements are not subject to SoF; contract or modification for sale or purchase of securities not subject to SoF even if agreement cannot be performed within one year of its making

5. UCC—when contract for sale of goods is at least $500, memo must indicate that contract has been made, identify parties, contain quantity term, and be signed by party to be charged

Exceptions—writing not required under UCC for:

• Specially manufactured goods

• Part payment

• Receipt and acceptance

• Judicial admission or

• Failure to object to memo within 10 days of receipt (when both parties are merchants)

6. Real property contract—applies to contracts providing for subsequent conveyances of interest in property (subsequent acts showing existence of contract may also make oral contracts for transfers of interest enforceable)

Exceptions to SOF

1. Promissory estoppel

2. Judicial admissions

Parol Evidence (P/E)

prevents introduction of prior extrinsic evidence that contradicts terms of written contract

Integration

parties intended writing to be their final agreement (P/E rule applies)

1. Total integration (complete expression of all terms of parties’ agreement)—parties cannot introduce extrinsic evidence of prior or contemporaneous understandings or negotiations

• Partial—if writing sets forth only some terms, then parties are permitted to introduce supplementary extrinsic evidence of other terms that are consistent with writing (not contradictory)

Intent of parties

—determines if there is total, partial, or no integration

• CL (four-corners rule)—can only look to writing itself for intent

  • DE Distinction—merger clause creates presumption of integration, but courts may still consider extrinsic evidence to decide if contract is completely or partially integrated

• Second Restatement—if extrinsic term of agreement would naturally be omitted from writing, then term can be introduced so long as it is not contradictory

• UCC—assumes written contract is only partial integration and allows almost any outside terms

• Restatement of Consumer Contracts—standard contract terms inconsistent with reasonable expectations do not constitute the final expression of consumer contract

When P/E is inapplicable

does not apply to communications occurring after execution of written contract and when parties are (partial list):

1. Raising defense to formation

2. Raising defense to enforcement

3. Proving condition precedent to existence of contract

4. Interpreting or clarifying ambiguity in contract

• DE Point of Law—DE courts generally follow plain-meaning rule and give contracts meaning an objective, reasonable third party would; contract terms should not be read in manner that makes them meaningless or illusory

5. UCC—supplementing even apparently unambiguous terms by evidence of trade usage or course of dealing (priority, highest to lowest: express terms, course of performance, course of dealing, trade usage)