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Hatley v. Stafford Case Brief


									Hatley v. Stafford 284 Or. 523, 588 P.2d 603 (Or. 1978)

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Hatley signed a handwritten lease to rent a farm from Stafford to grow wheat. There was a provision in the contract that Stafford could buy out the lease at the rate of $70 per acre. The contract didn't say when Stafford could exercise the buy out option. Hatley claimed that there had been an additional oral agreement that the buy out could only be done within the first 30-60 days of the lease. Stafford came onto Hatley's land and cut down the wheat in preparation for building a mobile home park. Hatley sued for trespass. o Hatley argued that the written lease was only a partial integration of the contract, which included both written and oral parts. o Stafford tried to argue that the evidence was inadmissible under the three part standard established in Mitchill v. Lath.  Stafford unsuccessfully argued that the oral agreement was inconsistent with written agreement, and therefore failed part of the Mitchill v. Lath test. The Trial Court allowed Hatley to introduce evidence of the oral agreement. The Trial Court found for Hatley. Stafford appealed on the basis that Hatley shouldn't have been allowed to use the oral evidence. The Appellate Court affirmed. o The Court found that the Trial Court was justified in admitting the parol evidence and that the question of whether the agreement was made was correctly left to the jury. o The Court found that a term of the oral agreement must contradict an express provision of the written agreement in order to be considered inconsistent with it.  Therefore, this part of the rule is satisfied because the written agreement doesn't say

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anything at all about a buy out. It would have to have a different buyout limitation than the oral agreement for it to be contradictory. o The Court found that parol evidence can only be introduced if:  The oral agreement was not inconsistent with the written agreement.  The oral agreement was collateral in nature.  The oral agreement was such that it might "naturally" be made separately from the written agreement "by parties situated as were parties to the written contract." Once again, the Court affirms that there is a presumption that the writing was intended to be a complete integration, at least when the writing is complete on its face, and should admit evidence of consistent additional terms only if there is substantial evidence that the parties did not intend the writing to embody the entire agreement. o The jury found that the fact the wheat at harvest would be worth $400 an acre, but the contract only provided for a $70 per acre buyout was evidence that there was more to the contract than what was in the written contract. o In addition, the Court found that the fact the written contract was 'unsophisticated', and no lawyers advised either party made it plausible that there was more to the contract that what was expressed in writing. Modern Courts have been more favorable to this decision about introducing parol evidence, and have been less favorable to the decision of Mitchill v. Lath. o Courts agree that you can always use parol evidence to interpret the words in the contract. If used aggressively, it can be a tremendous loophole. For example:  A law firm makes a detailed written contract with a merger clause to have modern art put in its lobby. Every 6 months, the painting is changed out. The third month the gallery puts in a Monet painting. The law firm says that this is impressionist, and therefore not 'modern art', so it doesn't meet the terms of the contract. The gallery could say that they had an oral understanding that 'modern' art was anything made after 1900. Here the oral agreement can be used to interpret the term 'modern'.

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