Name types of evidence that are not within scope of parol evidence rule (i.e. they are admissable).
- The following may be show by extrinsic evidence:
- Formation defects
- (e.g., fraud, duress, mistake, and illegality
- Evidence of a condition precedent to effectiveness to an agreement
- Evidence that “true consideration” was paid
- Nonpayment of consideration may be admitted as a defense
What is parol evidence rule?
- Any other agreements made prior to a fully integrated agreement
- as well as any oral agreements made contemporaneous with writing
- inadmissible to vary terms of writing
- as well as any oral agreements made contemporaneous with writing
What does it mean if a term is “collateral” to a written agreement?
The term is related to subject matter of agreement but is not part of the primary promise
- Parol evidence isadmissible if:
- alleged parol agreement is collateral to written obligation
- and does not conflict with it
-Under Article 2, a party may offer evidence of what to explain or supplement a written Ks terms?
- course of dealing
- usage of trade
- or course of performance
Is parol evidence admissable when there is uncertainty or ambiguity in written agreement’s terms or a dispute as to meaning of those terms?
Yes.
Parol evidence is admissable to aid court in reaching correct interpretation of agreement.
- But if meaning of the agreement is plain
- parol evidence is inadmissible
-Article 2’s version of parol evidence rule provides:
A written Ks terms may be explained or supplemented by:
- course of dealing, usage of trade, or course of performance evidence
- WHETHER OR NOT WRITING APPEARS AMBIGUOUS (differs from general rule)
- however the extrinsic cannot contradict a written K
- but may supplement by adding consistent additional terms
- UNLESS:
- there is a merger clause
- or court finds from all circumstances that writing intended as complete and exclusive statement of terms of agreement
How are conditions subsequent to formation of a K and conditions precedent to formation of a K treated under the parold evidence rule?
- Evidence of condition subsequent to formation of a K
- (e.g., an oral agreement that an existing duty to perform is excused upon happening of an event)
- is within scope of parol evidence rule
- (e.g., an oral agreement that an existing duty to perform is excused upon happening of an event)
- Evidence of condition precedent to effectiveness of a K
- (e.g., oral agreement that written K would not become effective until a condition occurred)
- falls outside scope of parol evidence rule
- (e.g., oral agreement that written K would not become effective until a condition occurred)
Restatements of Contracts applies the naturally omitted terms doctrine. What is this?
- it allows a party to introduce evidence of terms that might naturally be omitted from the written agreement
- A term would naturally be omitted if:
- it does not conflict with written integration; and
- it concerns a subject that similarly situated parties would not ordinarily be expected to include in written instrument
Despite parol evidence rule, a party to a fully integrated written K can always offer evidence:
Attacking agreement’s validity at time of formation
What is a condition precedent to K effectiveness?
An agreement that a K will not become binding until a certain condition has occurred.
What is a condition subsequent to formation of a K?
When there is a K, but a party is not obliged to perform until the happening of a certain event.
The condition limits or modifies a duty under a formed K and is subject to parol evidence rule.
If a past obligation would be enforceable except for the fact that a technical defense to enforcement stands in the way (e.g., statute of limitations), the courts will enforce a new promise if:
It is in writing or has been partially performed
When is a gratuitous surety promise considered supported by proper consideration?
- If gratuitous surety’s promise to pay is before or at same time as creditor performs or promises to perform
- creditor’s performance/promise = consideration for surety’s promise
- bc creditor incurred detriment in exchange for surety’s promise
- creditor’s performance/promise = consideration for surety’s promise
- If gratuitous surety does not make promise until after creditor performed or made promise to perform
- no consideration for surety’s promise
- because of preexisting legal duty rule
What is the material benefit rule?
A modern trend. VA DOES NOT FOLLOW THIS
- A promise considered to have valid consideration if:
- (i) its based on a material benefit previously conferred by promisee on promisor, and
- (ii) promisee did not intend to confer benefit as a gift.
- e.g. promisee performed an act at promisor’s request or
- performed unrequested act during an emergency
What is the preexisting duty rule?
A promise to perform, or the performance of, an existing legal duty is not consideration.
What is moral consideration?
Consideration already given or performed before a promise was made.
What is ratification.
A promise to perform a voidable obligation.
Is consideration with only a possibility of future value adequate consideration?
Yes, even if the value never comes into existence.
What is sham consideration?
When parties never intended that the consideration be paid.
$1 in K that is never paid
What is token consideration?
Consideration that is entirely devoid of value and is usually not considered to be legally sufficient consideration.
