Contracts – Parol Evidence Rule 

Posted: 1:00 am Mon, January 18, 2010
By admin
Tags: Contracts

Where the parties executed a promissory note which stated that it replaced a prior note and all obligations of defendant to plaintiff; the note required defendant to pay the balance on demand in money, not in stock as the first note had provided; defendant made some payments on the note; and when sued, defendant claimed that the note was part of a larger transaction that was based on an oral agreement and permitted defendant to pay plaintiff via an ownership interest in defendant’s company; the District Court concludes that the parties’ written agreement is clear and unambiguous and that consideration of the alleged oral agreement is barred by the parol evidence rule.

Although Minnesota law allows parol evidence to prove the failure of a condition precedent to a note’s taking effect, that exception to the general rule does not apply here where the note reflects the parties’ complete agreement, as demonstrated by defendant’s payments over three years, and the alleged oral agreement does not condition the note on the occurrence of any other event. Plaintiff’s motion for summary judgment is granted.