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Donald Rosenfeld, and Lynne Rosenfeld v. Deborah J. Boniske

Missouri Court of Appeals
2014 WL 2860575, 445 S.W.3d 81, 2014 Mo. App. LEXIS 693 (2014)
ELI5:

Rule of Law:

The parol evidence rule prohibits the consideration of prior or contemporaneous oral agreements to vary, contradict, or add to the terms of a fully integrated written contract, particularly when the contract contains a merger clause expressly stating it is the entire agreement.


Facts:

  • Deborah Boniske listed her home for sale.
  • Donald and Lynne Rosenfeld expressed interest in purchasing it but, due to Lynne Rosenfeld's illness, wanted the transaction to remain confidential.
  • Before submitting an offer, Donald Rosenfeld secured an oral promise from Boniske that she would keep their interest in her home and their plans to sell their own home a secret.
  • The Rosenfelds then submitted a written offer, drafted by Donald Rosenfeld, which included a merger clause stating, 'This is the entire contract and neither party shall be bound by representation as to value or otherwise unless set forth in [the] contract.'
  • After several counteroffers, the parties executed a final written contract that was contingent upon the Rosenfelds entering into a contract for the sale of their current residence by January 25, 2012.
  • The final written agreement did not mention the oral confidentiality agreement.
  • The Rosenfelds made limited, non-public efforts to sell their home by contacting a few individuals they knew.
  • Having failed to secure a contract to sell their home by the deadline, the Rosenfelds notified Boniske that their contract to purchase her home was null and void.

Procedural Posture:

  • The Rosenfelds filed a Petition for Declaratory Judgment and Refund of Earnest Money Deposit against Boniske in the trial court.
  • Boniske filed a counterclaim against the Rosenfelds for breach of contract.
  • The trial court granted partial summary judgment for Boniske, ruling that the contract's contingency clause imposed an implied obligation on the Rosenfelds to use reasonable efforts to sell their home.
  • Following a bench trial, the trial court entered judgment in favor of the Rosenfelds on their petition and against Boniske on her counterclaim.
  • Boniske (Appellant) appealed the trial court's judgment to the Missouri Court of Appeals, Eastern District.

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Issue:

Does the parol evidence rule bar a court from considering a prior oral confidentiality agreement to define a party's obligations under a written real estate contract that contains a merger clause and appears complete on its face?


Opinions:

Majority - Kurt S. Odenwald

Yes. The parol evidence rule bars consideration of the prior oral confidentiality agreement. The written sales contract was a fully integrated agreement, as evidenced by its comprehensive terms and the presence of an explicit merger clause. A merger clause creates a conclusive presumption that all prior and contemporaneous agreements have been merged into the final written document. Therefore, the trial court erred by admitting and relying on evidence of the prior oral agreement to determine that the Rosenfelds' limited, private sales efforts satisfied their implied duty of good faith and fair dealing. Because the oral agreement cannot be considered, the judgment based upon it must be reversed.



Analysis:

This decision strongly reaffirms the significance of the parol evidence rule and the power of merger clauses in contract law. It serves as a clear precedent that when a contract is deemed fully integrated, courts will not look outside the 'four corners' of the document to alter or supplement the parties' obligations. The ruling underscores the importance for contracting parties to ensure that all essential terms, particularly those that could modify performance standards like 'reasonable efforts,' are explicitly included in the final written agreement. This case diminishes the legal viability of relying on informal, oral 'side agreements' when a formal, integrated contract is executed.

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