Thompson v. Libby – Case Brief
Thompson v. Libby, 34 Minn. 374, 26 N.W. 1 (1885).
Facts: Thompson (P) owned logs of poor quality marked ‘H. C. A.’ lying in the Mississippi river and sold them to Libby (D). The agreement was a brief paragraph reciting the cost and markings on the logs and provisions for payment. Libby refused to accept the logs and Thompson sued. D claimed that P breached an oral warranty regarding the quality of the logs. At trial D presented testimony to prove the warranty over P’s objection. Judgment was entered for D and P appealed.
Issue: 1) Can parol contemporaneous evidence be used to contradict or vary the terms of a valid written contract? 2) Under what conditions is the admission of parol evidence admissible?
Holding and Rule: 1) No. Parol contemporaneous evidence is inadmissible to contradict or vary the terms of a valid written contract. 2) To justify the admission of parol evidence, the evidence must relate to a subject distinct from that to which the writing relates.
If a writing contains on its face a complete expression of the whole agreement, i.e. it includes terms sufficient to render it legally binding, it is presumed that the parties have introduced into it every material item and term, and parol evidence cannot be admitted to add additional terms to the agreement even if that evidence relates to a matter not addressed in the contract. The rule does not apply however where the writing is incomplete on its face and does not purport to contain the whole agreement.
Policy: The parol evidence rule is founded on the inconvenience and injustice that would result if matters in writing, made with consideration and deliberation and intended to embody the entire agreement of the parties, were subject to the uncertain testimony of slippery memory.
The court held that in this case there was nothing to indicate that the writing was informal and incomplete. In a sale of personal property a warranty as to quality is an item and term of the contract, and not a separate and independent collateral contract, and therefore cannot be added to the written agreement by oral testimony.
Disposition: For P – new trial granted.
Notes: Whether the contract is integrated is a question of law and must be determined from the four corners of the instrument.
This case is frequently cited incorrectly as Thompson v. Libbey.