Does our integration / entire-agreement clause keep out evidence of prior or side agreements in North Dakota?
For a sale of goods, N.D.C.C. § 41-02-09 (UCC 2-202) bars contradicting a final written expression with evidence of a prior or contemporaneous oral agreement, though the writing "may be explained or supplemented" by course of dealing, course of performance, or usage of trade, and (unless the writing was also intended as complete and exclusive), by evidence of consistent additional terms: "Terms with respect to which the confirmatory memoranda of the parties agree or which are otherwise set forth in a record intended by the parties as a final expression of their agreement with respect to such terms as are included therein may not be contradicted by evidence of any prior agreement or of a contemporaneous oral agreement but may be explained or supplemented:". Herman Oil, Inc. v. Peterman confirms this is a real departure from ordinary common-law contract doctrine: "Section 41-02-09, N.D.C.C., changes the common law of contracts and liberalizes the application of the parol evidence rule to writings evidencing a .contract for the sale of goods." Outside a sale of goods the default runs the other way: N.D.C.C. § 9-07-04 provides that "[w]hen a contract is reduced to writing, the intention of the parties is to be ascertained from the writing alone if possible, subject, however, to the other provisions of this chapter."
The trap
The order of the inquiry comes first: "Under N.D.C.C. § 41-02-09, the court must initially determine whether the parties intended a writing to be a final expression of their agreement on the written terms, or to be a complete and exclusive statement of their agreement." There is no assumption in North Dakota that a writing is final or exclusive just because it looks complete: Herman Oil states the opposite default applies absent an express finding: "There is no assumption that the parties intended a writing to be final or exclusive and, in fact, the assumption is to the contrary, unless the court expressly finds that the parties intended the contract to be completely integrated." In Herman Oil itself, invoices with no merger clause were held NOT to be a final expression of the parties' agreement, letting the court consider extrinsic evidence of a special payment arrangement: meaning an entire-agreement clause is doing real, load-bearing work in a North Dakota integration analysis, not merely restating a default the court would apply anyway. Even where a writing IS found final, § 41-02-09 still lets a court consider course of dealing and course of performance to explain or supplement it: an entire-agreement clause does not, by this section's own text, shut out that category of evidence. Herman Oil says it in terms: "Even if the court finds the parties intended a writing to be a final expression of written terms, N.D.C.C. § 41-02-09 authorizes the court to consider extrinsic evidence of course of dealing and course of performance to supplement or explain the written terms."
9 authorities
- statuteN.D.C.C. § 41-02-09enactment date not established
The words that state the rule
Terms with respect to which the confirmatory memoranda of the parties agree or which are otherwise set forth in a record intended by the parties as a final expression of their agreement with respect to such terms as are included therein may not be contradicted by evidence of any prior agreement or of a contemporaneous oral agreement but may be explained or supplemented:
- statuteN.D.C.C. § 41-02-09enactment date not established
The words that state the rule
but may be explained or supplemented: - By course of performance, course of dealing, or usage of trade (section 41-01-17); and - By evidence of consistent additional terms unless the court finds the record to have been intended also as a complete and exclusive statement of the terms of the agreement.
The words that state the rule
Section 41-02-09, N.D.C.C., changes the common law of contracts and liberalizes the application of the parol evidence rule to writings evidencing a .contract for the sale of goods.
The words that state the rule
There is no assumption that the parties intended a writing to be final or exclusive and, in fact, the assumption is to the contrary, unless the court expressly finds that the parties intended the contract to be completely integrated.
The words that state the rule
The written invoices did not contain a merger clause 5 and there is no assumption that the parties intended the invoices to be a final expression of their agreement. Under N.D.C.C. § 41-02-09, the trial court could consider extrinsic evidence of the commercial context of the parties’ agreement, including evidence of their “special arrangement,” to determine that the written invoices were not a final expression of their agreement about terms of payment.
The words that state the rule
We hold that the trial court’s implicit determination that Herman Oil and Peter-man Oil did not intend written invoices to be a final expression of their agreement was not clearly erroneous and permitted the court to rely on extrinsic evidence to determine the terms of that agreement.
- statuteN.D.C.C. § 9-07-04enactment date not established
The words that state the rule
When a contract is reduced to writing, the intention of the parties is to be ascertained from the writing alone if possible, subject, however, to the other provisions of this chapter.
The words that state the rule
Under N.D.C.C. § 41-02-09, the court must initially determine whether the parties intended a writing to be a final expression of their agreement on the written terms, or to be a complete and exclusive statement of their agreement.
The words that state the rule
Even if the court finds the parties intended a writing to be a final expression of written terms, N.D.C.C. § 41-02-09 authorizes the court to consider extrinsic evidence of course of dealing and course of performance to supplement or explain the written terms.
“Defective” means that reading found something to correct. What you are reading is the rule as it stands after that reading.