1. Overview: Integrated Agreements
2. Contract - Complete and Partial Integrations
3. Two Levels of Integration
4. The Parol Evidence Rule

A partially integrated contract is simply an agreement that is not fully integrated. A written contact is a very important tool used every day in business or in general life. The court system will often get involved if contracts have to be litigated due to a disagreement or breach.

Overview: Integrated Agreements

An integrated agreement is a type of writing that acts as the final expression in the terms of an agreement. The court will determine whether or not an integrated agreement is in question. There is no special form needed for an integrated agreement.

A written contract that is signed by all parties can include a special clause that says there are to be no other agreements among the parties. However, this declaration is not always conclusive.

Whether or not an integrated agreement is factual will have to be determined with evidence. It is generally determined by a trial judge. After the determination is made, further questions as to the agreement will have to be decided by the trier of fact.

Contract - Complete and Partial Integrations

A complete integrated agreement is a type of agreement that is adopted by all parties as an exclusive statement of the agreement terms. A partially integrated agreement is an agreement that is not otherwise a complete integrated agreement. The court will determine if an agreement is completely or partially integrated. It will be determined by the parol evidence rule.

The term integration will determine to how much each provision of the contract is included in the contract:

  • Complete integration- a complete integration occurs when the contract includes all the information with regard to the agreement between the parties. If a court decides that a contract is a complete integration, the parol of evidence rule will limit any outside evidence that makes changes to the original contract.
  • Partial integration- this refers to a written document that can only contain a portion of the information that constitutes the agreement among parties. If the court decides that a contract is a partial integration, it allows specific evidence that will supplement or explain the details of a contract. With partial integration, parol evidence will restrict the use of outside evidence that contradicts the contract. Integration clauses are not typically used in partial integrations. The agreement itself makes reference to any outside discussion that clarifies some parts of the agreement. Courts will consider any communications made prior if they supplement the contract. Court will not consider any form of communication that contradicts the contract.

Two Levels of Integration

A merger clause is also referred to as an integration clause. An integration clause is used to prevent any court testimony or other evidence regarding the contract from being used in court if litigation occurs. If a contract falls within a level one integration, any evidence of drafts previously made or other evidence can be admitted at a trial to explain or add to the contract, but it cannot contradict the contract terms.

However, if the contract is in level two integration, no evidence is allowed of any previous drafts at the time of negotiation.

When the court decides if integration is level one or two, there are some facts that the court will consider including:

  • Whether or not there is a merger or integration clause
  • If there is any information in the contract that is collateral
  • If any oral contract is claimed and how it is different from the written contract
  • The intent of the parties
  • How the contract was drafted, whether formally or rudimentarily
  • The time spent considering the drafting of the contract terms
  • Whether or not there was bargaining with specific terms
  • Whether or not the terms of the contract are at issue

The Parol Evidence Rule

The point of the rule is that contracts do not appear as soon as they are placed on paper. There needs to be negotiations of some kind to form a deal.

You can talk to a person on the phone or write a letter, but a contract is not formed just by those acts. A negotiation has to take place for a contract to be formed.

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