Contract Woes: When the Agreement Isn’t What You Thought

Contract Woes: When the Agreement Isn’t What You Thought

Contract negotiations are a common occurrence in the business world. In fact, no contract is created without some sort of back and forth between the parties. A proper negation process usually begins with negotiating about the business terms followed by the legal aspects. Yet, due to the fact that negotiations are often lengthy and complicated, it is easy for some of the terms to get lost in translation. In the end, the written contract may end up omitting some of the terms one party really cares about. In this situation, the parole evidence rule may preserve the contract as written.

What is the Parol Evidence Rule?

The parol evidence rule is a common law creation that prevents parties from changing the contract’s terms. It works by barring certain evidence of agreements not reflected in the contract. Thus, a party cannot dispute a written contract by trying to show that a “contemporaneous” agreement should take the place of the written document.

The intent behind the parol evidence rule is simple. The law assumes that both parties fully understood the negotiated terms before memorializing them in a document. Courts also prefer to enforce a written document because it is a tangible expression of the agreement. Furthermore, referring to the contract as the final result of negotiations reduces the possibility of unnecessary litigation. Thus, this concept is often called the “four corners” rule since it limits a court’s view to the document itself.

Notable Exceptions

The parole evidence rule is not bulletproof. There are a few recognized exceptions that allow the consideration of evidence that contradicts the contract terms. First, a modification that occurred after the contract can be admissible. Contract formation defects (i.e. fraud) can also be introduced. Next, a disputing party is allowed to argue that consideration was never satisfied. It’s also possible to provide proof of a related agreement that does not contradict the contract. Finally, if a term is judged to be ambiguous, the parties may submit evidence to clarify the meaning. To find out if your case qualifies for an exception, contact a business law attorney who works with contracts.

What is a Merger Clause?

Merger clauses are basically an attempt to express the contract as a final agreement. These clauses are commonly found in almost every contract. Typically, a merger clause will state that the contract is the entire agreement. It may also mention that the contract supersedes any other agreement. This clause serves a very important purpose to contract signers. It’s lets them know that they need to be totally happy with the contract before signing it. Merger clauses are the most effective when they are specific in nature. They should explicitly detail what types of outside agreements will not be included in the contract.

Resolving Contract Dispute Issues

Contract litigation is a difficult process. You should not attempt to resolve disputes without the help of an experienced lawyer. If you have contract issues in Utah, contact Spencer and Collier, PLLC. An experienced lawyer can help you with contract litigation, arbitration or contract preparation.

Tags: business contract, contracts, merger clause

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