Lipsit v. Leonard

64 N.J. 276, 315 A.2d 25 (1974)

 

RULE:

New York clearly further allows, in line with the majority of states, an action in tort for money damages, as distinct from one grounded in breach of contract, based upon oral fraudulent promises and misrepresentations which induced the written agreement and permits parol evidence to establish the same. The parol evidence rule is no bar.

FACTS:

Appellant former employee had an employment arrangement with appellant employers (formerly a sole proprietor then a corporation) consisting of a series of annual letter agreements and an alleged oral promise that he would be given an equity interest in the business. After a few years, appellees offered him an equity interest that was not acceptable to him. He was terminated and filed suit on a breach of contract based on the oral promises and a tort claim based on fraud. He claimed that appellees never intended to keep the oral promises, which amounted to a misrepresentation of an existing fact, and therefore fraud in the inducement to enter into the employment agreements.

ISSUE:

Is the tort claim of fraud in the inducement barred by the parol evidence rule under New York law?

ANSWER:

No

CONCLUSION:

The court held that the lower court erred with regard to the tort claim. It held that the claim was not barred by the parol evidence rule because New York law governed the case. Under New York law, an action in tort for money damages, based upon fraudulent promises and misrepresentations that induced a written agreement, permitted parol evidence to establish the contract. It modified the order and remanded.

Click here to view the full text case and earn your Daily Research Points.