Does our integration clause keep the other side's prior promises out?
Yes for prior negotiations, no for fraud. Virginia's parol evidence rule, which the Supreme Court of Virginia calls “a time-honored fixture in the law of this Commonwealth”, is that in controversies between two parties to a contract, “parol evidence of prior or contemporaneous oral negotiations or stipulations is inadmissible to vary, contradict, add to, or explain the terms of a complete, unambiguous, unconditional, written instrument” (Amos v. Coffey, quoting Godwin v. Kerns). The same opinion notes that there are “several well-defined exceptions to this rule”, summarised in Shevel's, Inc. v. Southeastern Associates, decided the same day. A merger clause does real work on top of that: in Spotsylvania County School Board the trial court had ruled the contract unambiguous and the contract's merger clause said the document “represents the entire and integrated agreement between the parties ... and supersedes all prior negotiations, representations, or agreements, either written or oral”, so “there was no reason or authority to admit evidence of pre-contract discussions and correspondence”, and the Supreme Court of Virginia held their admission error and ordered any similar evidence excluded on retrial. No Virginia opinion we hold states in terms that a merger clause does or does not defeat a claim of fraud in the inducement; the nearest authority is Robberecht, where the document carried a no-variation clause, an ‘As is Where Is’ acceptance and a blanket warranty waiver rather than an integration clause, and the Court held none of them reached the fraud claim. In George Robberecht Seafood the sale document said the aircraft was “accepted in ‘As is Where Is’ condition”, could not “be extended, altered or varied except by written instrument”, and waived “all warranties, guaranties, conditions or liabilities” including all liability for direct and consequential damages. The seller argued the UCC parol evidence, disclaimer and remedy-limitation sections together defeated the claim. The Court found “no merit in defendant’s argument”: “A buyer can show that a contract of sale was induced by the seller’s fraud, notwithstanding the fact the sale was made “as is”. ... The same is true even though the written contract contains covenants waiving warranties or disclaiming or limiting liabilities.” Read the results carefully. In each case the court decided an evidentiary or pleading question, not the merits: Amos affirmed a decree against the party offering the parol evidence; Spotsylvania reversed a contractor's jury verdict and remanded for a new trial; and Robberecht reversed a summary judgment for the seller and remanded for a trial on the merits. It held the buyer was entitled to try its fraud case, not that fraud had been proved.
The trap
The clause's strength and its ceiling come from the same premise. Amos and Spotsylvania both run through the writing being COMPLETE, UNAMBIGUOUS and UNCONDITIONAL (in Spotsylvania the trial court had already ruled the contract unambiguous before the merger clause did any work), so an integration clause bolted onto an ambiguous document does not close the question of meaning. Spotsylvania also draws its own line, in the same opinion and the same breath, and it is the line most often missed: having said the trial court erred in admitting precontract discussions and correspondence, the Court added that “the question of design errors and discrepancies in plans is a different matter, one not subject to the strictures of the merger clause”. A merger clause keeps out the negotiating history; it does not keep out evidence about defects in the documents the contract itself incorporates. And Robberecht is the Virginia authority a seller most often gets wrong: it rejected a combined defence of the parol evidence bar, an “as is” disclaimer and a limitation-of-remedies covenant, on the ground (stated in Packard Norfolk v. Miller and adopted in Robberecht) that an express warranty “in lieu of all other warranties” “does not render the seller immune from fraud that induced the contract” because “The warranty stands no higher than the contract which is vitiated by the fraud.” Boilerplate cannot immunise the representations that induced the deal, though winning that point only buys a trial.
14 authorities
The words that state the rule
The parol evidence rule is a time-honored fixture in the law of this Commonwealth. “[I]n controversies between two parties to *92 a contract, parol evidence of prior or contemporaneous oral negotiations or stipulations is inadmissible to vary, contradict, add to, or explain the terms of a complete, unambiguous, unconditional, written instrument.”
- case243 Va. 202Spotsylvania County School Board v. Seaboard Surety Co.Va.decided 1992read it at the source ↗
The words that state the rule
We agree with the Board. The trial court ruled that the contract was unambiguous. Furthermore, a merger clause in the contract stated that the document "represents the entire and integrated agreement between the parties ... and supersedes all prior negotiations, representations, or agreements, either written or oral." Hence, there was no reason or authority to admit evidence of pre-contract discussions and correspondence. Any similar evidence should be excluded upon retrial.
- case220 Va. 109George Robberecht Seafood, Inc. v. Maitland Bros. Co.Va.decided 1979read it at the source ↗
The words that state the rule
A buyer can show that a contract of sale was induced by the seller’s fraud, notwithstanding the fact the sale was made “as is”. 1 R. Anderson, Uniform Commercial Code § 2-316:35 (2d. ed. 1970). The same is true even though the written contract contains covenants waiving warranties or disclaiming or limiting liabilities.
- case220 Va. 109George Robberecht Seafood, Inc. v. Maitland Bros. Co.Va.decided 1979read it at the source ↗
The words that state the rule
The express warranty, which purports to be ‘in lieu of all other warranties’ does not render the seller immune from fraud that induced the contract. The warranty stands no higher than the contract which is vitiated by the fraud.
The words that state the rule
Our opinion in Shevel’s, Inc. v. Southeastern Assoc., 228 Va. 175 , 320 S.E.2d 339 (1984), this day decided, summarizes several well-defined exceptions to this rule.
The words that state the rule
Applying the “plain meaning” rule, we hold that the language of the Coffey deed was unambiguous and unconditional and that the testimony proffered by Mrs. Amos, which tended to vary and contradict the intention of the parties as expressed in the deed, was inadmissible.
The words that state the rule
Finding no merit in the assignments of error, we will affirm the chancellor’s decree. Affirmed.
- case243 Va. 202Spotsylvania County School Board v. Seaboard Surety Co.Va.decided 1992read it at the source ↗
The words that state the rule
We will demonstrate infra that the trial court did err in admitting evidence of precontract discussions and correspondence. We think, however, that the question of design errors and discrepancies in plans is a different matter, one not subject to the strictures of the merger clause.
- case243 Va. 202Spotsylvania County School Board v. Seaboard Surety Co.Va.decided 1992read it at the source ↗
The words that state the rule
For the reasons assigned, the judgment in favor of Sherman will be reversed, the jury's verdict set aside, and the case remanded for a new trial consistent with the views expressed in this opinion. Reversed and remanded.
- case220 Va. 109George Robberecht Seafood, Inc. v. Maitland Bros. Co.Va.decided 1979read it at the source ↗
The words that state the rule
Defendant filed as an exhibit with its answer an “Aircraft Delivery Receipt” memorializing the contract of sale. This document provided that it “shall not be extended, altered or varied except by written instrument”, stated that the airplane is “accepted in ‘As is Where Is’ condition”, and waived “all warranties, guaranties, conditions or liabilities”, including all liability for direct and consequential damages.
- case220 Va. 109George Robberecht Seafood, Inc. v. Maitland Bros. Co.Va.decided 1979read it at the source ↗
The words that state the rule
Pursuing that thesis, defendant argues that Code § 8.2-202 forbids the use of parol evidence to contradict the written contract; that Code § 8.2-316 excludes all implied warranties in a sale “as is”; that Code § 8.2-719, which authorizes contracting parties to “limit or alter the measure of damages recoverable”, validates the covenants waiving all claims for damages; and that plaintiff was, therefore, bound by all the waivers and disclaimers written into the contract. We find no merit in defendant’s argument.
- case220 Va. 109George Robberecht Seafood, Inc. v. Maitland Bros. Co.Va.decided 1979read it at the source ↗
The words that state the rule
While, as defendant says, contracting parties may waive their contractual rights and disclaim or limit certain liabilities, a “false representation of a material fact, constituting an inducement to the contract, on which the purchaser had a right to rely, is always *112 ground for rescission of the contract by a court of equity.”
- case220 Va. 109George Robberecht Seafood, Inc. v. Maitland Bros. Co.Va.decided 1979read it at the source ↗
The words that state the rule
We hold that the trial court erred in entering summary judgment on the pleadings, and we will reverse the judgment order and remand the case for a trial on the merits. Reversed and remanded.
- case220 Va. 109George Robberecht Seafood, Inc. v. Maitland Bros. Co.Va.decided 1979read it at the source ↗
The words that state the rule
Second, even when a party to a contract drafts the written document, he is not estopped to show that its terms were induced by the other party’s fraud; it follows that he is not estopped when the document is drafted by his agent.
“Defective” means that reading found something to correct. What you are reading is the rule as it stands after that reading.