medium · LSAT Reading Comprehension

The Parol Evidence Rule governs the extent to which parties to a written contract may introduce extrinsic evidence—such as prior negotiations or oral agreements—to contradict or supplement the written terms. The rule's application hinges on whether the contract is 'integrated.' A fully integrated agreement is intended by the parties as the final and complete expression of their deal. In such cases, no outside evidence is admissible to change the terms. However, if an agreement is only partially integrated, outside evidence may be admitted to supplement the writing, though not to contradict it. Courts often look for a 'merger clause' to determine integration, which explicitly states that the document is the entire agreement. Critics argue the rule creates injustice when one party relies on an oral promise not included in the final draft. Proponents maintain that without the rule, the stability of written commercial transactions would vanish, as every contract would be subject to the faulty memories or outright perjury of the contracting parties regarding what was said before the ink dried.

Based on the passage, if a contract contains a merger clause and a party later attempts to prove that the other side orally promised a discount during negotiations, how would a court most likely rule?

  1. It would refuse to consider the alleged oral discount, since the merger clause marks the writing as the parties' complete and final agreement.
  2. It would admit the alleged oral discount, but only to the extent that the promised price reduction does not directly contradict the written price.
  3. It would bar the oral evidence outright, reasoning that prior oral promises carry no legal force whatsoever in any commercial setting.
  4. It would admit the oral evidence so long as the party demonstrates that it reasonably relied on the discount promise to its own detriment.
  5. It would admit the oral evidence to supplement, though never to contradict, the price and other terms set out in the written document.

Sign up free to see the explanation and track your rank →

More LSAT Reading Comprehension practice

KomFi: Test Prep Made Easy

KomFi: Test Prep Made Easy — free adaptive practice for GMAT, GRE, SAT, ACT, National Real Estate Exam, Investment Banking, and finance with full explanations.

KomFi Academy is free GMAT prep and personalized GMAT help built as a training platform: 75,000+ practice questions, 26,500+ flashcards, on-demand video lectures, podcasts, and 4K slide decks. Flagship tracks: Free GMAT Prep, Free GMAT Resources, National Real Estate Exam Prep, Investment Banking Prep, Finance Prep, GRE, SAT, ACT, LSAT, MCAT, Financial Accounting, Private Equity, Private Credit, and Quantitative Finance.

Free GMAT Prep & Personalized GMAT Help

What's inside

Topics

View pricing · Read testimonials