Does this integration clause keep out evidence of what was said before signing?
For consistent or contradictory TERMS, largely yes: a writing intended as a final expression may not be contradicted by evidence of a prior or contemporaneous oral agreement, and where the writing is also intended as a complete and exclusive statement it may not even be supplemented by consistent additional terms (Code Civ. Proc. § 1856(a)-(b)). For FRAUD, no: § 1856(g) does not exclude evidence offered to establish illegality or fraud, and in Riverisland the Supreme Court overruled Bank of America etc. Assn. v. Pendergrass (1935) 4 Cal.2d 258, which since 1935 had required evidence offered to prove fraud to "establish some independent fact or representation, some fraud in the procurement of the instrument or some breach of confidence concerning its use, and not a promise directly at variance with the promise of the writing". Riverisland's RESULT ran against the party holding the writing: the Court of Appeal reversed, reasoning that Pendergrass is limited to cases of promissory fraud and that false statements about the contents of the agreement itself are factual misrepresentations beyond its scope, and the Supreme Court affirmed the Court of Appeal's judgment, so the borrowers' fraud and misrepresentation claims survived. The same opinion keeps two limits on the claim it revived: the intent element of promissory fraud "entails more than proof of an unkept promise or mere failure of performance", and promissory fraud requires a showing of "justifiable reliance on the defendant‟s misrepresentation", and the court expressly declined to decide whether borrowers who admittedly did not read the agreement could raise a triable issue on reliance, because neither court below had reached it. Whether the writing is integrated at all is a question for the court, not the jury (§ 1856(d)).
The trap
An integration clause in California does not stop a fraud claim built on the very promises the writing contradicts. That was the Pendergrass rule and it is gone. Since 2013 the clause's real work is on the terms side; a party who relies on it to shut out evidence of what the salesman promised is relying on law that was overruled. Note also § 1856(c): course of dealing, usage of trade and course of performance may explain or supplement even a fully integrated writing, and § 1856(h) applies the whole section to trust instruments, deeds and wills as well as contracts. The mistake in the OTHER direction is reading Riverisland as a licence. The opinion that killed Pendergrass still requires intent beyond mere nonperformance and still requires justifiable reliance, and it left the hardest reliance question open: the lender argued the borrowers could not have relied because they admittedly never read the agreement they signed, and the Supreme Court declined to decide that in the first instance. So the integration clause is not what defeats the fraud claim; reliance still can, and Riverisland leaves that question open.
8 authorities
- statuteCal. Civ. Proc. Code § 1856enactment date not established
The words that state the rule
(a) Terms set forth in a writing intended by the parties as a final expression of their agreement with respect to the terms included therein may not be contradicted by evidence of a prior agreement or of a contemporaneous oral agreement. (b) The terms set forth in a writing described in subdivision (a) may be explained or supplemented by evidence of consistent additional terms unless the writing is intended also as a complete and exclusive statement of the terms of the agreement. (c) The terms set forth in a writing described in subdivision (a) may be explained or supplemented by course of dealing or usage of trade or by course of performance. (d) The court shall determine whether the writing is intended by the parties as a final expression of their agreement with respect to the terms included therein and whether the writing is intended also as a complete and exclusive statement of the terms of the agreement. (e) Where a mistake or imperfection of the writing is put in issue by the pleadings, this section does not exclude evidence relevant to that issue. (f) Where the validity of the agreement is the fact in dispute, this section does not exclude evidence relevant to that issue. (g) This section does not exclude other evidence of the circumstances under which the agreement was made or to which it relates, as defined in Section 1860, or to explain an extrinsic ambiguity or otherwise interpret the terms of the agreement, or to establish illegality or fraud. (h) As used in this section, “agreement” includes trust instruments, deeds, wills, and contracts between parties.
- case55 Cal. 4th 1169Riverisland Cold Storage, Inc. v. Fresno-Madera Production Credit Assn.Cal.decided 2013read it at the source ↗
The words that state the rule
Finally, Pendergrass departed from established California law at the time it was decided, and neither acknowledged nor justified the abrogation. We now conclude that Pendergrass was ill- considered, and should be overruled.
- case55 Cal. 4th 1169Riverisland Cold Storage, Inc. v. Fresno-Madera Production Credit Assn.decided 2013read it at the source ↗
The words that state the rule
For these reasons, we overrule Pendergrass and its progeny, and reaffirm the venerable maxim stated in Ferguson v. Koch, supra, 204 Cal. at page 347: “[I]t was never intended that the parol evidence rule should be used as a shield to prevent the proof of fraud.”
- case55 Cal. 4th 1169Riverisland Cold Storage, Inc. v. Fresno-Madera Production Credit Assn.Cal.decided 2013read it at the source ↗
The words that state the rule
However, in 1935 this court adopted a limitation on the fraud exception: evidence offered to prove fraud “must tend to establish some independent fact or representation, some fraud in the procurement of the instrument or some breach of confidence concerning its use, and not a promise directly at variance with the promise of the writing.” (Bank of America etc. Assn. v. Pendergrass (1935) 4 Cal.2d 258, 263 (Pendergrass).)
- case55 Cal. 4th 1169Riverisland Cold Storage, Inc. v. Fresno-Madera Production Credit Assn.Cal.decided 2013read it at the source ↗
The words that state the rule
Plaintiffs, who prevailed below, not only defend the Court of Appeal‟s holding but, alternatively, invite us to reconsider Pendergrass.
- case55 Cal. 4th 1169Riverisland Cold Storage, Inc. v. Fresno-Madera Production Credit Assn.Cal.decided 2013read it at the source ↗
The words that state the rule
Here, as in Tenzer, we stress that the intent element of promissory fraud entails more than proof of an unkept promise or mere failure of performance. We note also that promissory fraud, like all forms of fraud, requires a showing of justifiable reliance on the defendant‟s misrepresentation. (Lazar v. Superior Court, supra, 12 Cal.4th at p. 638.) The Credit Association contends the Workmans failed to present evidence sufficient to raise a triable issue on the element of reliance, given their admitted failure to read the contract. However, we decline to decide this question in the first instance. The trial court did not reach the issue of reliance in the summary judgment proceedings below, nor did the Court of Appeal address it.
- case55 Cal. 4th 1169Riverisland Cold Storage, Inc. v. Fresno-Madera Production Credit Assn.Cal.decided 2013read it at the source ↗
The words that state the rule
Here as well we need not explore the degree to which failure to read the contract affects the viability of a claim of fraud in the inducement. 18 III. DISPOSITION We affirm the Court of Appeal‟s judgment.
- case55 Cal. 4th 1169Riverisland Cold Storage, Inc. v. Fresno-Madera Production Credit Assn.Cal.decided 2013read it at the source ↗
The words that state the rule
The Court of Appeal reversed. It reasoned that Pendergrass is limited to cases of promissory fraud. 3 The court considered false statements about the contents of the agreement itself to be factual misrepresentations beyond the scope of the Pendergrass rule. We granted the Credit Association‟s petition for review.
“Defective” means that reading found something to correct. What you are reading is the rule as it stands after that reading.