Texas Causes of Action & Affirmative Defenses

Texas Causes of Action & Affirmative Defenses

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Monday, September 21, 2009

The Parol Evidence Rule: Not just a rule about admissibility of testimony, extraneous evidence

THE NATURE OF THE PAROL (NOT PAROLE) EVIDENCE RULE The parol evidence rule is a rule of substantive contract law, not evidence. Hubacek v. Ennis State Bank, 159 Tex. 166, 317 S.W.2d 30, 31 (1958); DeClaire v. G & B McIntosh Family Limited Partnership, 260 S.W.3d 34, 45 (Tex.App.--Houston [1st Dist.] 2008, no pet. h.). STANDARD OF REVIEW ON APPEAL We review parol evidence questions de novo, as questions of law. DeClaire, 260 S.W.3d at 45. PAROL EVIDENCE AND INTERGRATION OR MERGER CLAUSE IN CONTRACT When the parties have concluded a valid, integrated agreement, the parol evidence rule precludes enforcement of a prior or contemporaneous inconsistent agreement. Edascio, L.L.C. v. NextiraOne L.L.C., 264 S.W.3d 786, 796 (Tex.App.--Houston [1st Dist.] 2008, pet. filed); ISG State Operations, Inc. v. National Heritage Insurance Company, 234 S.W.3d 711, 719 (Tex.App.--Eastland 2007, pet. denied). The execution of a written contract presumes that all prior negotiations and agreements relating to the transaction have been merged into the written contract. Edascio, 264 S.W.3d at 796; ISG State Operations, 234 S.W.3d at 719. Consequently, the agreement will be enforced as written and cannot be added to, varied, or contradicted by parol evidence. Edascio, 264 S.W.3d at 796; ISG State Operations, 234 S.W.3d at 719. The parol evidence rule is particularly applicable when the written contract contains a recital that it contains the entire agreement between the parties or a similarly-worded merger provision. Edascio, 264 S.W.3d at 796. Evidence that violates the rule is incompetent and without probative force, and cannot properly be given legal effect. Garner v. Fidelity Bank, N.A., 244 S.W.3d 855, 859 (Tex.App.--Dallas 2008, no pet.). Parol evidence may be admissible to show collateral, contemporaneous agreements that are consistent with the underlying agreement. Gary E. Patterson & Associates, P.C. v. Holub, 264 S.W.3d 180, 197 (Tex.App.--Houston [1st Dist.] 2008, pet. denied); DeClaire, 260 S.W.3d at 45. But this exception does not permit parol evidence that varies or contradicts either the express terms or the implied terms of the written agreement. Gary E. Patterson, 264 S.W.3d at 197; DeClaire, 260 S.W.3d at 45. A collateral agreement is one the parties might naturally make separately, i.e., one not ordinarily expected to be embodied in, or integrated with the written agreement and not so clearly connected with the principal transaction as to be part and parcel of it. Garner, 244 S.W.3d at 859. An agreement is integrated if the parties intended a writing to be a final and complete expression of agreed terms. Morgan Buildings and Spas, Inc. v. Humane Society of Southeast Texas, 249 S.W.3d 480, 486 (Tex.App.--Beaumont 2008, no pet.). The inclusion of a merger or integration clause does not conclusively establish that the written contract is fully integrated. Id. A fully integrated written agreement is a final and complete expression of all the terms agreed upon by the parties. Id. A partially integrated agreement is a final and complete expression of all the terms addressed in that written agreement, but is not a final and complete expression of all the terms the parties have agreed upon. Id. A court considers the surrounding circumstances in determining whether, and to what degree, an agreement is integrated. Id. SOURCE OF ALL SNIPPETS: 08-07-00071-CV (7/29/09)