Sherrodd, Inc. v. Morrison-Knudsen Co.

249 Mont. 282, 815 P.2d 1135 (1991)

 

RULE:

An exception is made to the parol evidence rule when fraud is alleged. Mont. Code Ann. § 28-2-905(2). However, that exception only applies when the alleged fraud does not relate directly to the subject of the contract. Where an alleged oral promise directly contradicts the terms of an express written contract, the parol evidence rule applies.

FACTS:

The subcontractor entered into a construction contract with the general contractors, and the insurance company provided payment bond on the job. The subcontractor asserted that the excavation to be performed on the job greatly exacted that which was stated in the contract. The subcontractor filed an action to set aside the price provisions in the contract and to recover quantum meruit plus tort damages. The lower court granted summary judgment to the general subcontractors and the insurance company, and the subcontractor appealed. On appeal, the court affirmed and held that, under the parol evidence rule, the subcontractor could not introduce evidence of the alleged oral misrepresentations of the general contractors. 

ISSUE:

Could the contractor introduce evidence of the oral misrepresentations?

ANSWER:

No

CONCLUSION:

The court stated that under Mont. Code. Ann. § 28-2-904, the execution of a contract in writing superceded all the oral negotiations or stipulations concerning its matter that preceded or accompanied the execution of the instrument. The court held that the subcontractor made no allegation of any subsequent contract in writing for promises of additional payments, and that the compensation for the subcontractor was exclusively governed by the written contract.

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