Gianni v. R. Russell & Co.
281 Pa. 320, 126 A. 791 (1924)
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Rule of Law:
When a written contract appears to be a complete agreement, the parol evidence rule bars evidence of prior or contemporaneous oral agreements that are within the scope of the written contract, unless there is an allegation of fraud, accident, or mistake.
Facts:
- Plaintiff was a tenant operating a store selling tobacco, fruit, candy, and soft drinks in a building.
- Defendant acquired the building and its agent negotiated a new lease with Plaintiff.
- Plaintiff alleges that during negotiations, Defendant's agent orally promised that if Plaintiff agreed to stop selling tobacco and pay a higher rent, Plaintiff would have the exclusive right to sell soft drinks in the building.
- Following negotiations, the parties executed a three-year written lease.
- The written lease stated that the Plaintiff was to use the premises “only for the sale of fruit, candy, soda water,” etc.
- The lease also contained an express provision stating that the Plaintiff was “not allowed to sell tobacco in any form.”
- The written lease did not contain any provision granting Plaintiff an exclusive right to sell soft drinks.
- Shortly after the lease was signed, Defendant leased an adjoining room to a drug company without restricting its right to sell soft drinks.
Procedural Posture:
- Plaintiff brought an action for damages against Defendant in a trial court for breach of an alleged oral contract.
- The trial court admitted evidence of the oral agreement and entered a judgment in favor of the Plaintiff.
- Defendant, as the appellant, appealed the trial court's judgment to the present appellate court.
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Issue:
Does the parol evidence rule bar evidence of a landlord's alleged prior oral agreement to grant a tenant an exclusive right to sell a product when the final written lease specifies what products the tenant is permitted to sell but is silent on the matter of exclusivity?
Opinions:
Majority - Mr. Justice Schaefer
Yes. The parol evidence rule bars evidence of the alleged oral agreement. Where parties have deliberately put their engagements in writing without any fraud or mistake, the writing is the only evidence of their agreement, and all preliminary negotiations and verbal agreements are merged and superseded by the written contract. To determine if an oral agreement is superseded, the court compares it to the written contract to see if parties would naturally and normally include the oral term in the written document. Here, the written lease dealt specifically with the subject matter of what products Plaintiff could and could not sell. An agreement for an exclusive right to sell one of those products is so closely related to this subject that it would naturally be included in the writing if the parties had agreed to it. Since the written lease embraces the field of the alleged oral contract, evidence of the latter is inadmissible.
Analysis:
This decision reaffirms a strict application of the parol evidence rule, emphasizing the finality and integrity of written contracts. It establishes a practical test for determining whether an oral agreement is 'within the scope' of a written one by asking if the subject matter is so related that the parties would have 'naturally and normally' included it in the final document. This case serves as a strong precedent against admitting parol evidence to add terms to an otherwise complete contract, particularly when the oral agreement concerns a topic already addressed in the writing. It reinforces the principle that parties must ensure all critical terms of their agreement are explicitly stated in the final written instrument.
