Posey v. Ford Motor Credit Co.
141 Idaho 477, 111 P.3d 162 (2005)
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Rule of Law:
For lease agreements governed by the Uniform Commercial Code (UCC), the admissibility of extrinsic evidence is determined by the UCC's liberal parol evidence rule, which focuses on the parties' intent for the writing to be a final and complete expression, rather than the stricter common law 'four corners' approach.
Facts:
- Gregory R. Posey signed an initial contract to lease a Ford truck for a 48-month term.
- Approximately three days later, a Ford representative informed Posey that the lease term was an error and should have been 36 months.
- On January 24, 2000, Posey signed a second lease agreement that called for 48 monthly payments but left the line for 'lease term in months' blank.
- Posey alleged that dealership representatives orally represented that the January 24 lease was for a 36-month term.
- On January 31, 2000, Ford Motor Credit Company sent Posey a letter stating, 'Line n of your lease agreement should show a term of 36 months.'
- After making 36 monthly payments, Posey attempted to exercise his option to purchase the truck.
- Ford refused to honor the purchase option, asserting that the lease term was 48 months, not 36.
Procedural Posture:
- Gregory R. Posey sued Ford Motor Credit Company in an Idaho district court (trial court) for breach of contract and violations of the Idaho Consumer Protection Act.
- Both parties moved for summary judgment.
- The district court granted summary judgment in favor of Ford, concluding the written lease was unambiguous and for a 48-month term.
- Posey (appellant) appealed the summary judgment to the Idaho Court of Appeals.
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Issue:
Does the Uniform Commercial Code's parol evidence rule, rather than the common law rule, govern the admissibility of extrinsic evidence to explain or supplement the terms of a written vehicle lease agreement?
Opinions:
Majority - Lansing, Judge
Yes. The Uniform Commercial Code's (UCC) parol evidence rule governs this lease transaction, not the common law rule. The district court erred by applying the stricter common law rule, which presumes a complete and unambiguous writing is fully integrated. The UCC, as codified in I.C. § 28-12-202, liberalized this standard to focus on the parties' actual intent. Under the UCC, a court must first determine if the parties intended the writing to be a 'final expression' of the terms within it and whether it was meant to be a 'complete and exclusive' statement of all terms. To make this determination, the court must consider extrinsic evidence beyond the 'four corners' of the document. Because the district court failed to apply the correct statutory standard and make the required factual findings about the parties' intent, its grant of summary judgment must be vacated and the case remanded.
Analysis:
This case highlights the critical distinction between the common law parol evidence rule and its more liberal counterpart under the Uniform Commercial Code. The court's decision clarifies that for transactions falling under the UCC, such as commercial leases, the primary inquiry is the parties' intent regarding the integration of their written agreement, not merely the facial completeness or ambiguity of the document. This precedent requires trial courts to engage in a factual inquiry, considering extrinsic evidence, before deciding whether to exclude that evidence from a jury's consideration. The ruling strengthens the UCC's policy of giving effect to the parties' true agreement over the strict formalism of the common law.
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