Article the Parol Evidence Rule in Utah: a Brief Survey

• Publication year: 2016
• Pages: 28

Article The Parol Evidence Rule in Utah: A Brief Survey Vol. 29 No. 2 Pg. 28 Utah Bar Journal April, 2016

March, 2016

Joshua L. Lee, J.

The parol evidence rule is simple in theory but has some nuances that are not always obvious or intuitive. Moreover, appellate decisions often recite the rule in loose and imprecise terms. This article provides a concise overview of key aspects of the parol evidence rule under Utah law.

The Basics

The parol evidence rule can be boiled down to the principle that, with certain exceptions, evidence of prior or contemporaneous agreements or statements is not admissible to supplement or contradict the terms of an integrated and unambiguous written contract. See, e.g., Tangren Family Trust v. Tangren, 2008 UT 20, ¶ 11, 182 P.3d 326. In practice, the parol evidence rule “functions as a rule of evidence.” Spears v. Warr, 2002 UT 24, ¶ 18, 44 P.3d 742. Technically, however, the rule is “a rule of substantive law and not evidence.” State v. Laine, 618 P.2d 33, 34 (Utah 1980). Indeed, “[p]arol evidence is not so much inadmissible to vary the terms of an integrated writing as it is irrelevant, because ‘the later agreement discharges the antecedent ones in so far as it contradicts or is inconsistent with the earlier ones.’” Novell, Inc. v. Canopy Group, Inc., 2004 UT App 162, ¶ 11, 92 P.3d 768 (emphasis added) (citation omitted).

Utah courts often describe application of the parol evidence rule as a two-step process: “First, the court must determine whether the agreement is integrated. If the court finds the agreement is integrated, then parol evidence may be admitted only if the court makes a subsequent determination that the language of the agreement is ambiguous.” Hall v. Process Instruments & Control, Inc., 890 P.2d 1024, 1027 (Utah 1995). As a practical matter, this formulation of the rule is sufficient for most cases. However, after performing the first step – i.e., deciding whether a writing is integrated – ambiguity may be only one of several potential issues to address.

Integration

In determining the admissibility of extrinsic evidence, the first step is to determine whether, and to what extent, a writing is integrated. An “integration” is “‘a writing or writings constituting a final expression of one or more terms of an agreement.’” Tangren, 2008 UT 20, ¶ 12 (citation omitted). The question of integration is whether an agreement appears to be “final and complete.” Id. (emphasis in original). In Utah, there is a “rebuttable presumption that a writing which on its face appears to be an integrated agreement is what it appears to be.” Union Bank v. Swenson, 707 P.2d 663, 665 (Utah 1985). Moreover, if the writing at issue contains a “clear” integration clause, the writing will conclusively be deemed integrated as a matter of law. Tangren, 2008 UT 20, ¶ 16. Otherwise, the question of integration is a factual question on which “any relevant evidence is admissible.” Hall, 890 P.2d at 1026.

In determining whether a writing is subject to exclusion on parol evidence grounds, it is necessary to assess whether that document is part of the same “integration” at issue. If several documents are “executed ‘substantially contemporaneously’ and are clearly interrelated, [courts] must construe them as a whole and harmonize their meanings if possible.” Winegar v. Froerer Corp., 813 P.2d 104, 109 (Utah 1991) (citation omitted). Where such documents exist, they may be considered together and are not excluded by virtue of the parol evidence rule. See id.; accord, e.g., Shields v. Harris, 934 P.2d 653, 657 (Utah Ct.App. 1997) (interpreting option agreement in light of contemporaneous lease). In other words, a substantially contemporaneous and related document may expand the scope of the “four corners” from which the intent of the parties must be derived.

Ambiguity

There are two types of ambiguity: ambiguity in language (facial ambiguity) and ambiguity with respect to the parties’ intent (latent ambiguity). Daines v....