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4. If the county defends by offering proof of the advertisement concerning the possibility of multiple awards, should the court admit the evidence?
In January 1991, the tire salesman learned that the county was buying some of its tires from one of the tire salesman's competitors. Contending that the tire salesman-county agreement was a requirements contract, the tire salesman sued the county for the damages caused by the county buying some of its tires from the competitor.
Responding to the county's written advertisement for bids, a tire salesman was the successful bidder for the sale of tires to the county for the county's vehicles. The tire salesman and the county entered into a signed, written agreement that specified, «It is agreed that the tire salesman will deliver all tires required by this agreement to the county in accordance with the attached bid form and specifications, for a one-year period beginning September 1, 1990.» Attached to the agreement was a copy of the bid form and specifications. In the written advertisement to which the tire salesman had responded, but not in the bid form, the county had stated, «Multiple awards may be issued if they are in the best interests of the county.» No definite quantity of tires to be bought by the county from the tire salesman was specified in any of these documents.
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Regardless of whether a contract is completely or partially integrated, parol evidence will, however, be allowed in situations where the writing is incomplete; the writing is not a true statement of the agreement of the parties because of fraud, accident or mistake; subsequent modification, or illegality; or when the writing is ambiguous. If a term of a contract is ambiguous, parol evidence will be admissible to explain the contract so as to make it unambiguous.
A is correct. Here, the written agreement between the tire salesman and the county provided for the sale to the county of «all tires required by this agreement.» It is not clear whether this language evidences an intent by the parties to enter into a requirements contract. Requirements contracts are a type of sales contract that obligates the buyer to purchase all of its requirements of a good, in this case, tires, from the seller. Because the written contract is ambiguous on this issue, the advertisement may be admitted to demonstrate that the county did not intend to create an exclusive requirements contract, and was not obligated to purchase tires exclusively from the tire salesman.
B is incorrect. As mentioned above, the parol evidence does not solely apply when a prior agreement is made orally. The parol evidence rule bars all oral or written agreements made prior to the final written agreement when the prior agreements contradict the final written contract. Regardless of whether a contract is completely or partially integrated, parol evidence is allowed when there is an ambiguity in the contract itself. As such, this answer is incorrect because it makes no difference that the extrinsic evidence, in this case, the advertisement, is in writing.
C is incorrect. As discussed above, parol evidence is admissible when there is an ambiguity in the written contract. In this case, there is an ambiguity concerning what was meant by the term, «all tires required by this agreement.» This answer is incorrect because the parol evidence rule has an exception concerning the admissibility of extrinsic evidence to resolve ambiguities.
D is incorrect. An illusory promise is a promise that is indefinite or lacks mutuality, where only one side is bound to perform and is unenforceable. Here, the issue is not whether the contract in question is enforceable or not. Rather, the question is whether evidence of extrinsic evidence, the advertisement, is admissible to resolve whether the county intended to reserve the right to grant multiple awards.