Determining Scope and content of Obligation

Case: Luther Williams, Jr., Inc. v. Johnson (1967; DC)

Parties: Plaintiff - Luther Williams, Jr., Inc. (appellant)

Defendant - Johnson (appellee)

Facts: Parties entered into a K for improvements on Johnson's house. Johnson

alleged that they signed the K thinking it was only an estimate, and that they
told Williams that the improvements would depend upon their ability to get
financing. They thought their understanding with him was that they were not
obligated until they procured the financing. Johnson later got another contractor
instead. Williams objected to Johnson's admission of the oral agreement regarding
financing as extrinsic evidence. His objections were overruled and verdict for
appellees (Johnsons). Williams appealed.

Issue: Whether the parole evidence rule required exclusion of all testimony
regarding the alleged condition. Yes.

Holding: Affirmed.

Reasoning: The intent of the parties to a contract was a valid inquiry and that
parol evidence was only one way to determine intent so long as there was no
provision in the contract contrary to the parol evidence. No provision was made
regarding financing. Therefore, the parol condition would not contradict the terms
of the writing.

• Just because there is a "merger" clause, it doesn’t necessarily show the intent
of the parties to have a total integration of the writing. Court should also
consider circumstances surrounding the making of a K.
○ Ex. Seller makes an oral promise, and buyer signs a K. K doesn’t specify
the oral K, but has a merger clause. This may be unconscionable if seller has
reason to believe that the buyer would not assent to the transaction if buyer knew
that the writing contained a particular term.

Notes
• Here, the K has an integration clause
○ You cant have parole evidence if K says it embodies the entire
understanding btwn the parties and there are no verbal agreements and
representations therewith
○ But here the K was conditional on obtaining financing
• Judge Quinn (williams v. thomas walker)
○ He says there are 2 problems that stem from the integration clause
□ Given that there is an integration clause, can we admit evidence to
show that the parties did not intend that it contains the whole agreement
□ if there is a contradiction, you cannot admit parole evidence
- so if there is an integration clause, doesn’t it contradict by saying there are
additional terms?
® How does the judge get out of this?
◊ The contradiction depends on the other terms of the
agreement, and the agreement doesn’t have a financing clause, so it doesn’t
contradict
◊ How do we know if its integrated? That’s a question
of fact
► To determine the intent of the parties, you
have to not only look at the written document, but also to the surrounding
circumstances.
 } But isnt it the purpose of parole
evidence rule to keep other stuff out? Like catch 22. circular reasoning.
® Judge explains the apparent paradox pg 632
◊ The intent must be sought where always intent must
be sought, namely, in the conduct and laguge of the parties and the surrounding
circumstances. The document alone will not suffice. What is intended to cover
cannot be known till we know what there was to cover….
• First judge hears parole evidence, then depending on whether he believes
integrated or not, then he will or not let the jury hear it