34. What is a “complete integration” and “partial integration”?
The term integration determines the extent to which all provisions of the contract are included in the written document. It can either be completely integrated or partially integrated.
• Complete Integration – A complete integration is when the contract contains all of the facts or information regarding the parties’ agreement. If the court determines that a contract is a complete integration, the parol evidence rule limits all prior or contemporaneous outside evidence that contradicts, modifies, or supplements the contract. A complete integration will generally contain a strong integration clause specifically excluding any outside information not specifically mentioned in the terms of the agreement.
⁃ Example: I enter into a contract to supply you with goods. If the court is called upon to determine the extent of our duties, the court will look to see if the document demonstrates an intent to include all of out terms in the agreement. Including a clause in the contract stating that this is the full and complete understanding of the parties will generally make the document a complete integration. As such, the court will not consider any communications prior to or contemporaneous with the execution of the contract.
• Partial Integration – The written document may contain only part of the information constituting the agreement between the parties. If a court determines that a contract is a partial integration, it will allow certain outside evidence that serves to supplement or explain provisions of the contract. Even with a partial integration, the parol evidence rule restricts outside evidence of prior or contemporaneous communications that specifically contradict the terms of the written contract. Partial integrations generally do not contain integration clauses. Often, the agreement itself will make reference to outside communications to clarify certain provisions of the agreement.
⁃ Example: In the example above, the court determines if the contract is a complete or partial integration. In the agreement, if we make reference to prior communications or it is apparent that we intended for the agreement to include or incorporate prior communications, it is a partial integration. The court would consider any prior communications that appear to supplement or add to the written contract. The court will not consider communications that contradict the express terms of the contract.
• Discussion: Why do you think the court disallows the consideration of contemporaneous and prior communications of the contract is a complete integration? Should the court consider prior communications to fully understand the intent and agreement of the parties? Why or why not?
• Practice Question: Harold enters into a contract so supply Dana with manufacturing materials. The contract does not contain an integration clause. When a dispute arises between Harold and Dana regarding each party’s duties under the agreement, Dana wants the court to consider a chain of emails between her and Harold to explain the extent of their duties. Under what conditions will the court consider the chain of emails?