Before an oral agreement is received to vary a written contract at least three conditions must exist: (1) the agreement must in form be a collateral one; (2) it must not contradict express or implied provisions of the written contract; and (3) it must be one that parties would not ordinarily be expected to embody in the writing. Or, put another way, an inspection of the written contract, read in the light of surrounding circumstances, must not indicate that the writing appears to contain the engagements of the parties, and to define the object and measure the extent of such engagement. Or again, it must not be so clearly connected with the principal transaction as to be part and parcel of it.
Plaintiff buyer negotiated with defendant sellers to purchase a farm. As a condition to this purchase, defendants agreed to remove an icehouse encumbering the land. The purchase agreement was reduced to writing, yet the oral agreement concerning the removal of the icehouse was ignored. Litigation ensued in which plaintiff attempted to compel performance on the part of defendants. Upon final determination, the court reversed, holding that the presence of a written agreement clearly invoked the parol evidence rule striking the outside oral agreement.
Can the oral agreement of both parties may be enforced in a court of equity?
The presence of a written agreement clearly invoked the parol evidence rule striking the outside oral agreement. Moreover, the court held that although the oral agreement was collateral in nature, it could have been readily inserted into the more dominating written form. Accordingly, defendant was not required to remove the icehouse.