So far we've been talking about cases where either the contract was oral or the contract was written. But there's actually a really thorny interpretation problem that arises for courts when contracts are in writing but some of the promises that the parties are claiming are not in the writing. That seems like it wouldn't happen very often but actually if you can think about a situation in which two parties are negotiating and they have some form contract in front of them and they're trying to figure out whether or not to sign that form contract and going back and forth on some collateral promises, I think you can think of a situation. Let me offer like an example here. Let's just take a hypothetical. I am applying for a job as a computer programmer and there's a written agreement with standard terms about salary and benefits that the hiring manager has basically printed out and we're sitting together looking at it. I ask the hiring manager, "Actually at this firm, are employees allowed to take any extra unpaid vacation time outside of the three weeks that are guaranteed?" This just happens to matter to me because I know I have three family weddings in the coming year or something like that. The hiring manager says, "Oh yes, absolutely. Actually, we always let people take up to one week of additional unpaid time off. I promise this is part of the deal." So I say, "Oh great, okay." and I sign the paperwork. Now on general ascent grounds, like just thinking about what do we agree to, it seems like the hiring manager and I have really agreed to a set of terms, it includes both the stuff in the paperwork and it includes the extra conversation about the unpaid vacation time. But now imagine that later on when I go to take the time, I'm refused for whatever reason, maybe the old person has moved apartments, I work for someone else, she says, I've never heard of this policy or it wasn't official. We can't find anything written down in company policies anywhere. Now, assume for now that people witnessed the conversation I had about the unpaid vacation originally, is not in dispute whether this was promised to me or is not in dispute for the purposes of reality but I am going to have to prove it to court. Now, this would be very unlikely case to go to litigation, but so just bear with me and assume that a judge is actually going to consider this case. There is a very likely barrier to my convincing a court to enforce my deal, specifically the verbal part of it and that's because of a rule called the parol evidence rule. It's also sometimes referred to as the rule on extrinsic evidence. Parol in this case, P-A-R-O-L no e refers to verbal, so the parol evidence rule is a rule that says when there's a writing, we're going to be very cautious about letting in any evidence that the parties have that would claim that the bargain between these parties included promises that are not in the writing. It's a rule that favors the written document if there is a written document. So here's a formal formulation of this rule, which is the parol evidence rule prevents the introduction of evidence of prior or contemporaneous negotiations and agreements that contradict, modify, or vary the contractual terms of a written contract when the written contract is intended to be a complete and final expression of the parties agreement. You can see why this rule might exist. You can imagine parties who are going through a lengthy negotiation and during this negotiation, there's all kinds of proposals, they're passing slips of paper back and forth. There's different ideas about what the final contract is going to involve. At the end, they come together and they draft something, they say, "This is our deal." and they write it out. The idea is that if one of the parties who wants to claim that there was a breach or something like that later on tries to say, "I know this is our final agreement but listen, there was also this other part of the promise from earlier on in the negotiations that was supposed to have been included." The court is supposed to disfavor that evidence on the theory that if you're going to write everything down, we're going to assume that we should take that writing very seriously. Now, it does depend what kind of evidence the parties are suggesting. If there is a writing the parties intended to be the final word on the contents of that writing, so let's say it's a writing that includes like the salary and the start date, something like that and I go in and say, "Oh actually, the salary says it was supposed to be a $60,000, but I know it was supposed to be $65,000. That's what we really said." That's a very easy call. The court in that case is going to say, "No, that's a contradictory oral term, it's not permissible." The more difficult situation is if I come in with something that is referred to as a consistent additional term. A consistent additional term would be something like my idea of this unpaid vacation time where it doesn't contradict anything in the agreement. An additional unpaid week of vacation doesn't contradict the fact that you get three weeks of paid vacation, it doesn't contradict anything about the salary. It's a consistent additional term in the sense that if this were part of the deal, we would be able to understand what this deal mean. It's not going against what's in the writing. In the event that someone's trying to introduce a consistent additional term, what the court is going to ask is whether or not the written contract was intended to be a complete and final expression, which is supposed to be exclusive and complete, which is to say this contract involves what's in this writing and nothing more. Now, historically in the common law and this is still the rule today, if the parties haven't said anything in the contract about whether or not it's intended to be complete and final, the court will look to whether or not they appear to have intended this agreement to be complete and final. They can find that out in a variety of ways, including looking to see how detailed and long this agreement appears to be or looking and seeing whether or not it seems like it's the kind of term that the parties would normally have included in this writing. That's pretty mushy to be honest and a lot of people in the position of firms or employers don't leave it up to chance, whether a court is going to determine that the writing was final and complete. Instead, they do something that's called including a merger clause. A merger clause, I don't know why it's called a merger clause. This doesn't really merge anything. All a merger clause says is, this writing is intended by the parties to be a complete and final expression of our agreement. It's a way of telling the court, don't let anything outside of this writing be part of this deal. Now, there are some real benefits of this rule, so the writing is a reliable shared piece of evidence. The parties can keep looking back to it for reference and the court can look to it for reference. It keeps a record of what the parties are actually agreeing to. We might think too, when people are writing stuff down, they're usually attentive to the details of what's going into the writing. The downsides of the parol evidence rule are that in a case like the one I described, it looks like the employee would have no real reason to doubt that the hiring manager was making a promise in good faith. Employees are going to be less likely than employers to know about the parol evidence rule and so it means that parties who are less frequently involved in these negotiations, what I would call more one-shot players, they're only part of this transaction a few times in their lives, that they might be persuaded to take a job on the basis of oral representations that later on they can't count on. It's a rule that does tend to disfavor people with less experience in the employment or in the legal system. That's the parol evidence rule.
