Commercial Division Blog

Posted: August 15, 2017 / Categories Commercial, Contracts

Court Excludes Parol Evidence Despite Lack of Merger Clause

On August 9, 2017, the Second Department issued a decision in Hoeg Corp. v. Peebles Corp., 2017 NY Slip Op. 06066, holding that even where the contract had no merger clause, parol evidence should not have been considered in interpreting it, explaining:

A written agreement that is complete, clear, and unambiguous on its face must be enforced to give effect to the meaning of its terms and the reasonable expectations of the parties, and the court should determine the intent of the parties from within the four corners of the contract without looking to extrinsic evidence to create ambiguities. The parol evidence rule generally operates to preclude evidence of a prior or contemporaneous communication during negotiations of an agreement that contradicts, varies, or explains a written agreement which is clear and unambiguous in its terms and expresses the parties' entire agreement and intentions. Where, as here, there is no merger clause, the court must examine the surrounding circumstances and the writing itself to determine whether the agreement constitutes a complete, integrated instrument.

Here, both a reading of the written retainer agreement and a consideration of the surrounding circumstances lead to the conclusion that the written retainer agreement is a complete written instrument, and, thus, evidence of what may have been agreed orally between the parties prior to the execution of this integrated written instrument cannot be received to vary the terms of the writing. The written retainer agreement was comprehensive in its scope and coverage and provided that, this agreement shall apply to all properties to be acquired and developed on behalf of the defendant.

(Internal quotations and citations omitted).