Does our entire-agreement clause keep the other side's prior agreements and side promises out?
Yes, that is what a merger clause does in Minnesota. When parties reduce their agreement to writing, parol evidence is ordinarily inadmissible to vary, contradict or alter the written agreement; but where a written agreement is ambiguous or incomplete, evidence of oral agreements tending to establish the intent of the parties is admissible (Alpha Real Estate). 'A merger clause establishes that the parties intended the writing to be an integration of their agreement.' Where a comprehensive lease contained a merger clause stating it was the entire agreement, the Supreme Court held it need not look beyond the writing itself to determine whether it was a complete integration, and it was error to use the parties' conduct or an earlier written agreement to modify its terms.
The trap
The clause decides integration; it does not decide meaning or every other doctrine. Alpha Real Estate still applied the Bussard test as a cross-check (if the additional agreement is one that similarly situated parties would include in the written agreement, the written agreement is complete), and it added that if the lease had been ambiguous the ambiguity would have been construed against Delta, which drafted it ('Even if there were an ambiguity in the 1997 lease, any such ambiguity would be construed against the party who drafted it'); the Court found no ambiguity, so that is the fallback rule stated rather than applied, and a merger clause in your own form does not buy you the benefit of the doubt on wording. Two things a merger clause did NOT do in Minnesota's cases read here: it did not bar reformation as a doctrine (the Court reached the merits of mutual mistake and scrivener's error, and rejected it on the evidence), and it did not bar a fraud claim, Sorchaga declined to reach the point ("This issue is not properly before us") and added, in a footnote, that "in any event, we have held that fraudulent statements or misrepresentations are an exception to the parol evidence rule", citing Hanson, Martin, Hafner and Ganley Bros. Nothing read here says a merger clause disclaims reliance.
12 authorities
- case664 N.W.2d 303Alpha Real Estate Co. of Rochester v. Delta Dental Plan of MinnesotaMinn.decided 2003read it at the source ↗
The words that state the rule
when parties reduce their agreement to writing, parol evidence is ordinarily inadmissible to vary, contradict, or alter the written agreement.
- case664 N.W.2d 303Alpha Real Estate Co. of Rochester v. Delta Dental Plan of MinnesotaMinn.decided 2003read it at the source ↗
The words that state the rule
where a written agreement is ambiguous or incomplete, evidence of oral agreements tending to establish the intent of the parties is admissible.
- case664 N.W.2d 303Alpha Real Estate Co. of Rochester v. Delta Dental Plan of MinnesotaMinn.decided 2003read it at the source ↗
The words that state the rule
A merger clause establishes that the parties intended the writing to be an integration of their agreement. Richard A. Lord, Williston on Contracts § 33:21 (4th ed.1999). In some jurisdictions a merger clause is “conclusive evidence of the parties’ intent to consider the agreement integrated.”
- case664 N.W.2d 303Alpha Real Estate Co. of Rochester v. Delta Dental Plan of MinnesotaMinn.decided 2003read it at the source ↗
The words that state the rule
Thus, under these facts, we need not look beyond the writing of the 1997 lease itself to determine whether it is a complete integration.
- case664 N.W.2d 303Alpha Real Estate Co. of Rochester v. Delta Dental Plan of MinnesotaMinn.decided 2003read it at the source ↗
The words that state the rule
Bussard instructs that if the additional agreement is one that similarly situated parties would include in the written agreement, then the written agreement is complete. Bussard, 294 Minn. at 226 , 200 N.W.2d at 162 . The survival of the additional rent obligation after purchase is certainly important enough that the parties would have included it in the 1997 lease if it were intended to survive after a purchase by Alpha.
- case664 N.W.2d 303Alpha Real Estate Co. of Rochester v. Delta Dental Plan of MinnesotaMinn.decided 2003read it at the source ↗
The words that state the rule
Moreover, as found by the district court, the 1997 lease was drafted by Delta’s counsel. Even if there were an ambiguity in the 1997 lease, any such ambiguity would be construed against the party who drafted it.
- case664 N.W.2d 303Alpha Real Estate Co. of Rochester v. Delta Dental Plan of MinnesotaMinn.decided 2003read it at the source ↗
The words that state the rule
Here, the 1997 lease contains a merger clause: All preliminary and contemporaneous negotiations are merged into and incorporated in this Lease Agreement. This Lease Agreement contains the entire agreement between the parties and shall not be modified or amended in any manner except by an instrument in writing executed by the parties hereto. This merger clause specifically states that it is the “entire agreement between the parties.” As the district court found, “the 1997 lease is a 54-page, comprehensive agreement which, by its terms, contains the entire agreement between the parties.”
- case664 N.W.2d 303Alpha Real Estate Co. of Rochester v. Delta Dental Plan of MinnesotaMinn.decided 2003read it at the source ↗
The words that state the rule
Although the district court found that the 1997 lease contained the entire agreement of the parties, it engaged in a practical construction of the 1995 agreement to modify the terms of the 1997 lease. We agree that the 1997 lease is a comprehensive agreement that contains the entire agreement of the parties, but we also conclude that the district court erred in construing the 1997 lease and the 1995 agreement together.
- case664 N.W.2d 303Alpha Real Estate Co. of Rochester v. Delta Dental Plan of MinnesotaMinn.decided 2003read it at the source ↗
The words that state the rule
We conclude that the 1997 lease is a complete integration and represents the complete and exclusive statement of the terms of the agreement between the parties and is unambiguous. Therefore, it was error to consider extrinsic evidence, such as the conduct of the parties, and the terms of the 1995 agreement, to reform or modify the terms of the 1997 lease.
- case664 N.W.2d 303Alpha Real Estate Co. of Rochester v. Delta Dental Plan of MinnesotaMinn.decided 2003read it at the source ↗
The words that state the rule
Finally, we affirm the court of appeals on the grounds stated herein, that this was not an appropriate case for reformation of a contract. The district court erred when it found that the absence of language in the 1997 lease regarding the survival of the five percent additional rent after the closing of the option was a result of mutual mistake or scrivener’s error. The district court reasoned that because the parties did not negotiate a change to the five percent additional rent provision in the 1995 or 1997 lease, “The change was made by mistake, inadvertence, or a scriv-ner’s [sic] error.” Thus, on the basis of mutual mistake and scrivener’s error, the district court essentially reformed the 1997 lease to include the survival of the five percent additional rent clause. Reformation is appropriate when (1) there was a valid agreement between the parties expressing their real intentions; (2) the written instrument failed to express the real intentions of the parties; and (3) this failure was due to a mutual mistake of the parties. Nichols v. Shelard Nat’l Bank, 294 N.W.2d 730, 734 (Minn.1980). To demonstrate mutual mistake based on scrivener’s error, “it is necessary that both parties agree as to the content of the document but that somehow through a scrivener’s error the document does not reflect that agreement.” Id. Here, there is no evidence of a drafting error; nor is there evidence of mutual mistake, fraud, misrepresentation or inequitable conduct. Reformation was not an appropriate remedy.
The words that state the rule
This issue is not properly before us because we denied review of the district court's determination of fraud. But, in any event, we have held that fraudulent statements or misrepresentations are an exception to the parol evidence rule.
- case664 N.W.2d 303Alpha Real Estate Co. of Rochester v. Delta Dental Plan of MinnesotaMinn.decided 2003read it at the source ↗
The words that state the rule
Therefore, we remand the issue to the court of appeals to review de novo whether the five percent additional rent clause violates federal and state law. Reversed in part, affirmed in part and remanded.
“Defective” means that reading found something to correct. What you are reading is the rule as it stands after that reading.