Luther Williams, Jr., Inc. v. Johnson

Brief Fact Summary. Luther Williams, Jr., Inc. (Plaintiff) sought to recover $670.00 as liquidated damages under a contract on Johnson’s (Defendant) home. Plaintiff’s objections to the introduction of evidence concerning a parol agreement were overruled and a verdict was returned for the Defendant. Plaintiff appeals.

Synopsis of Rule of Law. The parol evidence rule does not bar testimony of an oral agreement as a condition precedent to a final written contract.

Facts. Plaintiff and Defendant entered into a written agreement to sell and buy real property. Defendant was unable to obtain financing and Plaintiff claimed that the Defendant breached their contract. Defendant testified that they thought the contract was merely an estimate, and that they told Plaintiff the improvements would depend on financing and that they would not become obligated until their procured funds. Plaintiff objected to the introduction of evidence concerning a parol agreement regarding financing. The objections were overruled and the jury returned a verdict for the Defendant. Plaintiff appeals.

Issue. Whether the admission of testimony regarding the oral condition precedent violated the parol evidence rule?

Held. Judgment affirmed.
The parol evidence rule provides that when parties to a contract reduce their agreement to writing that is supposed to be the final agreement and testimonies concerning prior or contemporaneous oral agreements, which tend to contradict the terms of the contract are inadmissible. In order to determine whether a particular subject is embodied in the contract, the intent of the parties must be examined. Thus, it is necessary to look at more than the written instrument but to also look at the surrounding circumstances. Just because it is not stated in the written instrument does not mean that it is not included.
Here, there was no that provided for financing in the written contract, thus, the parol agreement as a condition precedent would not contradict the writing. Therefore, it was not error to admit testimony showing that the writing was not intended to be a complete statement of the agreement of the parties and to instruct the jury to find for the Defendant if they found that negotiations regarding the condition precedent had taken place and the contract was not to be binding until financing was obtained.

Discussion. If the parties orally agree on a condition to the enforceability of the contract, but the condition was not included in the writing, courts generally allow proof of condition despite the parol evidence rule as long as it does not contradict the terms of the contract.