Hi Again Colleagues:
After I sent this--having formalized my thinking by getting down on "paper"--I figured out I was right about the second situation. Parties are certainly free to modify any contract they make. If the modification is subject to the parol evidence rule, it has to be evidenced by some writing. It wouldn't matter whether it was characterized as a post-contract modification or not: it still has to be written. Thanks to those of you who responded. Everyone agreed on this one.
The second situation is a good example of the instructor--me--not controlling the facts tightly enough to make it possible to answer crisply. (See the facts below). Folks came up with different answers:
First, it might be possible to construe the whole negotiation situation as one single contractual undertaking, in which case the parol evidence rule would apply. There was some discussion in several cases like that: parties negotiate, sign agreement, elements of negotiation still in the air, one side says the other agreed shortly after the signing (say, less than an hour). Parol evidence rule applies.
Second, it might be possible to construe the situation as a real post-contract modification, in which case the parol evidence rule would not apply.
Third, is this a transaction for the sale of goods--the automobile--worth more than $500 so that the post-contract modification would have to be written under the UCC's statute of frauds? Or is the "sales tax" in issue not a "sale of goods" so that common law applies, and an oral modification would be okay?
Fourth, if what Buyer says is true, isn't this fraud in the inducement, evidence of which is exempt from the parol evidence rule?
Thanks for your input. It's good to be able to bounce ideas around a bit.
Dan
Prof. Daniel M. Warner
Dept. of Accounting (Business Legal Studies)
MS 9071, Parks Hall 401
Western Washington University
516 High St.
Bellingham, WA 98225
360 650-3390
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From: Academy of Legal Studies in Business (ALSB) Talk [[log in to unmask]] On Behalf Of Daniel Warner [[log in to unmask]]
Sent: Thursday, April 29, 2010 3:16 PM
To: [log in to unmask]
Subject: Tangled in a quiz answer
Hi Colleagues:
Here are two somewhat similar problems I gave my students on a quiz. In reading their answers, I wonder if my idea of the right response is incorrect. Perhaps you can set me straight.
1. Buyer purchases automobile from dealer. Salesman says “both before and after” she signed the contract that the sales tax has been paid, but the contract has a clear merger or integration clause and it says that “no other agreement of any kind will be recognized unless it is in writing signed by the an agent of the dealer.” The sales tax had not been paid. Can Buyer introduce evidence of what the salesman told her?
2. Merchant Seller sells $10,000 worth of goods to merchant Purchaser on an oral contract. Seller immediately follows up with a written confirmation (10-day reply doctrine). Three weeks later, Seller claims, the parties orally modify the contract price to $11,000. Before delivery, Purchaser repudiates the contract.
The first question is a real case from Arkansas. In the case, the appeals court said the parol evidence rule controls and Buyer cannot bring forth evidence of what Salesman said. But what about the exception to the parol evidence rule regarding post-contract modification? The representations made contemporaneously with the contract wouldn’t be allowed; would the post-contract representations be allowed?
In the second question, the original $10,000 contract is fine because of the ten-day reply doctrine. But the $1000 modification is not evidenced by any writing. Would evidence of its existence be barred by the statute of frauds, or would it also fall under the post-contract modification exception to the parol evidence rule?
What do you think? I’d be grateful for input.
Thanks.
Dan
Daniel M. Warner
Professor, Dept. of Accounting
(Business Legal Studies)
MS 9071, WWU
516 High St.
Bellingham, WA 98225
360 650-3390
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