Strangers to Agreement Can Invoke the Merger Clause and Parole Evidence Rule to Avoid Liability
The Appellate Division, First Department recently held that a defendant who is not a party to an agreement may rely upon the merger clause and parole evidence rule to avoid the introduction of prior drafts of the agreement, negotiations and other communications from being considered when determining whether or not it was the intended obligor. A merger clause or the parole evidence rule is a doctrine that generally renders evidence of a prior understanding between the parties of an agreement to be inadmissible when it is offered to change or contradict the terms of a written contract. The exception is when evidence is offered to prove fraud, duress, mistake, misrepresentation or illegality. Here, the First Department disagreed with the plaintiff and allowed the defendant, a non-party to the agreement, to invoke the merger clause and parole evidence rule because the plaintiff, as a party to the agreement, sought to alter or contradict the terms of the agreement.
See Underhill Holdings, LLC v. Travelsuite, Inc., 2016 NY Slip Op 01760 [1st Dept Mar. 15, 2016]