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When Negotiated Terms Don't Make It Into Your New York Contract


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1/1/2016
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So you've spent weeks, maybe even months, of back and forth negotiations on this deal ... and you've finally reached an agreement. And after the euphoria of finally closing the deal and closing on the contract wears off, a problem arises. And when you go back to look at the contract you realize that some of the most important things that you had negotiated somehow never made it into the written contract. Under New York law, this is called the "parol evidence rule," and here's the general rule: "Absent fraud or mutual mistake, where the parties have reduced their agreement to an integrated writing, the parol evidence rule operates to exclude evidence of all prior or contemporaneous negotiations between the parties offered to contradict or modify the terms of their writing. ( Fogelson v. Rackfay Constr. Co., 300 N.Y. 334, 90 N.E.2d 881; Thomas v. Scutt, 127 N.Y. 133, 27 N.E. 961.) Although at times this rule may seem to be unjust, €œon the whole it works for good” ( Mitchill v. Lath, 247 N.Y. 377, 380, 160 N.E. 646) by allowing a party to a written contract to protect himself from 'perjury, infirmity of memory or the death of witnesses.' ( Thomas v. Scutt, 127 N.Y. 133, 142, 27 N.E. 961, supra; see, generally, Richardson, Evidence [10th ed.], 601-634). In other words, unless there is fraud involved, or both parties made the same mistake, you cannot enforce these additional terms that had been negotiated unless they were reduced to writing and made part of the contract. And while I hate to agree with the Court on this one, it is, in my view, the right result; otherwise, there would be almost nothing to prevent a party to a contract from being able to avoid his obligations by simply saying that the agreement was changed by some other conversation they had.



Category: Breach of Contract

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