3. If the fancier sues the rancher for damages and seeks to introduce evidence of the alleged oral agreement, the court probably will

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. Often times, courts look to whether there is a merger clause as evidence that a written agreement is intended to be a completely integrated contract. 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.

B is correct. Here, a court will probably admit the evidence as to the saddle but not the option to choose a brown horse. The written agreement specifically states that the rancher will sell the fancier a gray horse and the fancier may choose from among the grays on the rancher's ranch. A court will likely allow evidence relating to the saddle because it does not contradict the written agreement, it simply supplements the written agreement. Moreover, the parol evidence rule does not bar extrinsic evidence offered to establish that an integration is complete or partial. So, evidence of the saddle agreement is evidence of a partially integrated agreement and will be admissible. On the other hand, evidence that the parties agreed to give the fancier the option to choose a gray or a brown horse, specifically contradicts the agreement. As such, even when a written agreement is partially integrated, the parol evidence rule will bar this contradictory term.

A is incorrect. A court will not admit evidence as to both the saddle and the option to choose a brown horse. Evidence of the option to choose a brown horse directly contradicts the written agreement. Even if the court finds there is partial integration, it will bar this evidence. Though the court will likely allow evidence of the saddle, this answer is wrong because it incorrectly states a court will allow evidence of the option to choose a brown horse.

C is incorrect. As discussed above, a court will not admit evidence as to the option to choose a brown horse because this specifically contradicts the written agreement. The parol evidence rule bars evidence that contradicts the written agreement. As such, this evidence will be barred. Moreover, a court will admit evidence as to the promise to include the saddle because this evidence does not contradict the written agreement and simply supplements it. The parol evidence rule does not bar supplementing information when the written agreement is partially integrated.

D is incorrect. According to Restatement (Second) of Contracts § 214, the parol evidence rule does not bar extrinsic evidence offered to establish that an integration is complete or partial. As such, evidence of the agreement to include a saddle will be admitted as evidence the written agreement is only a partial integration. Moreover, as explained above, if a court finds there is partial integration, evidence of the promise to include a saddle is admissible because it does not contradict the written agreement and simply supplements it.