15. Should the court admit this evidence?

The parol evidence rule bars evidence of all prior or contemporaneous agreements that contradict a written agreement. Essentially, the law operates to exclude evidence intended to show that the parties had agreed to something different from what was included in the written agreement.

If a court determines that a contract contains all of the terms regarding the parties' agreement, the parol evidence rule bars evidence of all prior or contemporaneous evidence that contradicts or modifies the written agreement. Courts often look to whether there is a merger clause as evidence that a written agreement is intended to be a completely integrated contract. Merger clauses, however, are not conclusive evidence that a writing is completely integrated. If the agreement is completely integrated, no outside evidence will be permitted to modify the terms of the agreement, even if the modification is in addition to an existing term, rather than a contradiction of the term.

On the other hand, if a written agreement contains only partial information, or certain terms are missing, courts will allow certain extrinsic evidence to supplement or explain terms and provisions of the written agreement. The parol evidence rule, however, will still bar outside evidence of prior or contemporaneous agreements that contradict the written contract. In short, if a contract is partially integrated, prior consistent additional terms may be shown.

Regardless of whether a written agreement is completely or partially integrated, the parol evidence rule does not bar extrinsic evidence offered for the following purposes: to aid in the interpretation of existing terms; to show that a writing is or is not an integration; to establish that an integration is complete or partial; to establish subsequent agreements or modifications; and to show that the terms were the product of illegality, fraud, duress, or mistake.

D is correct. As discussed above, under the UCC's parol evidence rule, a merger clause does not conclusively establish that an agreement is completely integrated. Further, a finding that an agreement is completely integrated does not necessarily bar the admission of extrinsic evidence in cases where evidence is introduced to explain an ambiguous term. Here, evidence of the parties' discussions during their negotiations is admissible to aid in explaining what amount they intended for the trade-in and whether they intended «trade-in allowance» to include an assignment of the buyer's claim against her insurance company.

A is incorrect. The fact that the buyer accepted the old car does not bar any additional claim by the dealer and does not waive its potential claims against a seller. As previously mentioned, the decisive issue here is whether the parol evidence rule will allow evidence that the dealer was entitled to the insurance payment. Merger clauses are not conclusive to the issue of complete integration and, even if a writing is found to be completely integrated, extrinsic evidence may be admissible to explain or interpret existing terms. Here, evidence of the parties' discussions during their negotiations is admissible to interpret whether they intended «trade-in allowance» to include an assignment of the buyer's claim against her insurance company.

B is incorrect. As discussed above, courts often look to whether there is a merger clause as evidence that a written agreement is intended to be a completely integrated contract. Merger clauses, however, are not conclusive evidence that a writing is completely integrated. Furthermore, even if a court finds that the written agreement, in this case, is a completely integrated contract, evidence that aids in the interpretation of existing terms in a completely integrated contract, is admissible.

C is incorrect. This answer choice correctly states the law but is factually incorrect. The UCC's parol evidence rule does allow the introduction of extrinsic evidence to establish fraud even if an agreement is completely integrated. However, there is no indication of fraud in this case. As such, the fraud exception is irrelevant. As discussed above, the dispositive issue here is whether the parol evidence rule will allow the proffered evidence. Under the parol evidence rule, a merger clause does not conclusively determine that an agreement is completely integrated. And, even if an agreement is completely integrated, extrinsic evidence may still be admissible to interpret or explain existing terms. In this case, evidence of the parties' discussions during their negotiations is admissible to aid in explaining whether they intended «trade-in allowance» to include an assignment of the buyer's claim against her insurance company.