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The issue of the extent of integration of understandings in a formal agreement is an issue of fact for the decision of the trial judge, entirely preliminary to any application of the parol evidence rule.
Pursuant to a written lease agreement, plaintiff Wang Laboratories, Inc. leased computer equipment to Docktor Pet Centers, Inc. (DPC). The lease agreement contained no provision suggesting that any significance should be attached to the completion of two successive operating cycles successfully. However, a subsequent letter by DPC to Wang referred to a negotiating meeting in April 1974 wherein the parties agreed that the lease payments were not to commence until after two complete cycles had been completed running parallel on the Wang equipment. No reply to the letter was on the record, but it was testified that one of the Wang staff agreed on the contents of the letter. Plaintiff instituted the present action to recover for rental payments under the written lease agreement. DPC has filed a counterclaim asking for consequential damages of various types. The trial court found that the parties entered into a written lease agreement with an oral understanding that lease payments were not to commence until after two complete and successful monthly operating cycles, with reports generated to DPC’s satisfaction.
Did the written lease agreement embody all prior understandings between the parties?
The Court held that the oral agreement was collateral to the written lease agreement. According to the Court, whether there was an integration of an informal understanding which one of the parties contended had been integrated into a written agreement was a question of the intention of the parties on which proof could be received ranging beyond the writing proper. In the case at bar, there was evidence showing a substantial number of DPC's difficulties with, and various failures of performance by, Wang's system; hence, the trial judge was warranted in finding that DPC never received two successful operating cycles from the Wang system. The facts which would have given rise to DPC's obligation to continue to pay rent, under the oral agreement found by the trial judge, thus never occurred.