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Posey v. Ford Motor Credit Co. - 141 Idaho 477, 111 P.3d 162 (Ct. App. 2005)

Rule:

If a written contract is complete upon its face and unambiguous, no fraud or mistake being alleged, extrinsic evidence of prior or contemporaneous negotiations or conversations is not admissible to contradict, vary, alter, add to, or detract from the terms of the contract. Under the common law rule, the presence of a merger clause in a written contract conclusively establishes that the agreement is integrated and therefore subject to the parol evidence rule.

Facts:

Plaintiff Gregory R. Posey signed a lease agreement for a truck manufactured by defendant Ford Motor Credit Company ("Ford"). The lease called for 48 monthly payments of $ 635.43, with an option to purchase the truck for $ 9,514.00 at the end of the lease term. Posey claimed that a few days later, a Ford representative informed Posey of errors in the agreement, and a new agreement was executed: the "lease term in months" was not filled in, but at two other places on the form, the lease clearly called for 48 monthly payments of $ 612.72 per month; there was an option to purchase for $ 10,873.60 at the end of the lease. Several days later, Posey received a letter from Ford stating that the lease term was 36 months. Thus, Posey claimed he had the option to purchase the vehicle for $ 10,873.60 after making 36 monthly payments of $ 612.72. After doing so, Posey tried to exercise his option to purchase the truck for $ 10,873.60, but Ford refused. Posey then filed a lawsuit against Ford in Idaho state court alleging breach of contract and violations of the Consumer Protection Act ("Act"). Both parties filed motions for summary judgment. The trial court granted Ford's motion, finding, inter alia, that the original lease was complete and unambiguous, that it set forth a 48-month lease term, and the parol evidence rule therefore precluded Posey from presenting evidence of any inconsistent agreement. Posey appealed.

Issue:

Did the trial court apply the correct parol evidence rule?

Answer:

No.

Conclusion:

The appellate court reversed the trial court's judgment. The court ruled that the trial court erred by applying the common law parole evidence rule because Idaho Code § 28-12-101, et seq. governed leases and included a specific parol evidence provision. This Uniform Commercial Code parol evidence provision was intended to liberalize the common law rule and to abolish any presumption that a writing was a total integration. The appellate court held that because the trial court had made no findings, as required under Idaho Code § 28-2-202, a remand was necessary, and that an agreement modifying a lease contract—such as the post-lease letter to Posey—needed no consideration to be binding. Because the court was vacating summary judgment on the breach of lease claim, the derivative grant of summary judgment on the Idaho Consumer Protection Act claim had to be vacated as well.

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