Johnson v. Curran
633 P.2d 994, 1981 Alas. LEXIS 538 (1981)
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Rule of Law:
To establish fraudulent inducement as an exception to the parol evidence rule, a party must demonstrate not only that a misrepresentation was made, but that the misrepresentation actually induced the party to enter into the written contract.
Facts:
- Jeanette Johnson, owner of Le Pussycat Lounge, negotiated with the Jabberwock Band for a performance engagement.
- Before the contract was signed, Johnson asserts a band member, Jim Davis, orally promised that she could terminate the agreement on two weeks' notice if the band did not draw well.
- Johnson and the band then executed a standard American Federation of Musicians' form contract for the band to perform from November 23, 1977, to January 17, 1978.
- The written contract contained a specific duration and did not include the two-week cancellation provision.
- The band's performances failed to attract sufficient patrons, causing business to drop off significantly.
- After the fourth week of the engagement, Johnson gave the band two weeks' notice and then terminated their performance.
Procedural Posture:
- The Jabberwock Band sued Jeanette Johnson in district court for breach of contract.
- Johnson asserted an affirmative defense and counterclaimed for damages based on fraudulent inducement.
- The band moved for summary judgment, arguing the parol evidence rule barred Johnson's evidence of the antecedent oral agreement.
- The district court granted partial summary judgment in favor of the band.
- Johnson appealed to the superior court, which affirmed the district court's decision.
- Johnson then petitioned the Alaska Supreme Court for review.
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Issue:
Does the parol evidence rule bar evidence of an antecedent oral promise that contradicts a term in the written contract when that evidence is offered to prove fraudulent inducement, but the party fails to show that the promise actually induced them to sign the contract?
Opinions:
Majority - Rabinowitz, Chief Justice
Yes, the parol evidence rule bars evidence of a prior oral agreement when the party alleging fraudulent inducement fails to show the essential element of inducement. While parol evidence is generally admissible to prove fraud, a party must satisfy all elements of the claim. Here, the antecedent oral agreement for a two-week cancellation right is inconsistent with the written contract's specified duration and is therefore inadmissible to add a term. To admit this evidence under the fraudulent inducement exception, Johnson had to show that the band's promise induced her to sign the contract. Her affidavit failed to provide any evidence that she misapprehended the written contract's terms or that she was deceived into signing it based on the oral promise. Without proof of inducement, the claim for misrepresentation fails, and the parol evidence is inadmissible.
Analysis:
This case clarifies the application of the fraudulent inducement exception to the parol evidence rule, establishing a high bar for its use. It demonstrates that merely alleging a prior oral promise that contradicts the written agreement is insufficient; a party must produce specific evidence showing they were actually deceived and that this deception was the reason they entered the contract. The decision reinforces the primacy of written agreements and serves to prevent parties from easily undermining contracts by later claiming contradictory oral promises were made. It stresses that the element of inducement is a critical, and separately provable, component of a fraudulent inducement claim.
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