Does this merger/integration clause actually block a claim that we orally promised more, and when is a contract ambiguous in the first place?
Whether a contract is ambiguous is a question of LAW, decided by the court from the contract as a whole in light of the circumstances existing when it was formed, though for an instrument that plainly discloses the parties' intention, or is not fairly susceptible of more than one legal meaning, proof of surrounding circumstances is prohibited (Sun Oil, quoting Lewis). A contract is ambiguous only if, after applying the rules of construction, it remains reasonably susceptible to more than one meaning. The parties merely arguing for different readings does not itself create an ambiguity. Parol evidence is not admissible to create an ambiguity in a contract that is unambiguous on its face; if a contract is unambiguous, the parol evidence rule precludes consideration of evidence of prior or contemporaneous agreements unless an exception to the rule applies, and the collateral-and-consistent exception reaches only an agreement that is both collateral to and consistent with the writing and does not vary or contradict its express or implied terms or obligations.
The trap
An integration clause is only as strong as the ambiguity/parol-evidence machinery behind it. No authority in this rule construes a merger clause as such; what the authorities quoted here establish is that for an integrated writing 'the parol evidence rule circumscribes the use of extrinsic evidence' (Sun Oil), with the ambiguity exception and its limits. Drafters sometimes assume the merger clause alone forecloses extrinsic evidence; Texas courts still ask the antecedent ambiguity question first.
12 authorities
The words that state the rule
The ambiguity must become evident when the contract is read in context of the surrounding circumstances, not after parol evidence of intent is admitted to create an ambiguity.
The words that state the rule
Only where a contract is first determined to be ambiguous may the courts consider the parties’ interpretation, see Sun Oil Co. (Delaware) v. Madeley, 626 S.W.2d 726, 732 (Tex.1981), and admit extraneous evidence to determine the true meaning of the instrument.
The words that state the rule
Whether a contract is ambiguous is a question of law for the court to decide by looking at the contract as a whole in light of the circumstances present when the contract was entered.
The words that state the rule
A contract is unambiguous if it can be given a definite or certain legal meaning. Columbia Gas Transmission Corp. v. New Ulm Gas, Ltd., 940 S.W.2d 587, 589 (Tex.1996). On the other hand, if the contract is subject to two or more reasonable interpretations after applying the pertinent rules of construction, the contract is ambiguous, creating a fact issue on the parties' intent.
The words that state the rule
Hence, in Lewis v. East Texas Finance Company, 136 Tex. 149 , 146 S.W.2d 977, 980 (1941), we said: *732 If a written contract is so worded that it can be given a certain or definite legal meaning or interpretation, it is not ambiguous. It follows that parol evidence is not admissible to render a contract ambiguous, which on its face, is capable of being given a definite certain legal meaning. This rule obtains even to the extent of prohibiting proof of circumstances surrounding the transaction when the instrument involved, by its terms, plainly and clearly discloses the intention of the parties, or is so worded that it is not fairly susceptible of more than one legal meaning or construction.
The words that state the rule
Since mere disagreement over the interpretation of the lease does not make it ambiguous, we must determine which party’s interpretation is correct.
The words that state the rule
An unambiguous contract will be enforced as written, and parol evidence will not be received for the purpose of creating an ambiguity or to give the contract a meaning different from that which its language imports.
The words that state the rule
If a contract is unambiguous, the parol evidence rule precludes consideration of evidence of prior or contemporaneous agreements unless an exception to the parol evidence rule applies. See Hubacek v. Ennis State Bank, 159 Tex. 166 , 317 S.W.2d 30, 31 (1958). Haden argues that the collateral and consistent exception applies. Under the exception, parol evidence can be used to demonstrate a prior or contemporaneous agreement that is both collateral to and consistent with a binding agreement, and that does not vary or contradict the agreement’s express or implied terms or obligations. Id. But “[a] previous or simultaneous agreement to alter the fee agreed upon in a written contract is in conflict with the written contract and not merely collateral to it.” Lakeway Co. v. Leon Howard, Inc., 585 S.W.2d 660, 662 (Tex.1979) (per curiam); see also Rincones v. Windberg, 705 S.W.2d 846, 849 (Tex.App.-Austin 1986, no writ) (“It is a fair conclusion, we think, that the parol evidence rule prohibits the admission of oral evidence which alters the payment terms of a written contract.”). The evidence offered by Haden would alter the written fee agreement, and is therefore not admissible under the collateral and consistent exception to the parol evidence rule. The court of appeals erred in holding that there was no meeting of the minds necessary to form a binding contract, and erred in holding that the parol evidence rule did not bar Haderis evidence of an oral agreement to cap fees. Accordingly, we grant Sacks’s petition for review and, without hearing oral argument, see Tex. R.App. P. 59. 1, reverse the court of appeals’ judgment and render judgment that the trial court’s judgment with respect to the admissibility of parol evidence be reinstated. We remand the case to the court of appeals for consideration of other issues raised on appeal.
The words that state the rule
We reverse the judgments of the courts below and remand the cause to the trial court.
The words that state the rule
SPEARS, J., dissents in which POPE, C.J., and RAY and ROBERTSON, JJ., join. SPEARS, Justice, dissenting. I respectfully dissent. I do not believe that the property settlement agreement entered into by the Cokers is ambiguous.
The words that state the rule
Because we cannot discern whether Davidson's unilateral right to terminate "personnel policies" applies to the agreement to arbitrate, we conclude that the arbitration agreement is ambiguous. We reverse the court of appeals' judgment and remand this case to the trial court for further proceedings consistent with this opinion. TEX. R. APP. P. 60.2(d). Justice SCHNEIDER filed a dissenting opinion, joined by Justice O'NEILL. Justice SMITH filed a dissenting opinion.
The words that state the rule
For example, when interpreting an integrated writing, the parol evidence rule circumscribes the use of extrinsic evidence.
“Defective” means that reading found something to correct. What you are reading is the rule as it stands after that reading.