In 2014, Barker contacted Price about a van Price had advertised for sale. The advertisement described the van as a 1994 Ford E–350.
Barker and Price agreed to meet, and, on April 9, Barker inspected the van. Following Barker’s inspection, he orally agreed to purchase the van from Price for \($15,000.\) The parties then agreed in writing that Barker would make an immediate \($2,000\) deposit and Price would provide Barker “title by 4/14/14 or deposit will be refunded in full” (“the deposit agreement”). The deposit agreement described the van as a Ford E–350 but did not specify the model year.
Sometime prior to April 14, 2014, Price provided Barker with a certificate of title for the van. The certificate described the van as a 1993 model rather than a 1994 model. Barker refused to accept the certificate of title and demanded a refund of his \($2,000.\) Price, in turn, refused to refund the deposit.
In his complaint, Barker alleged that Price had failed to provide a certificate of title in accordance with the deposit agreement, which entitled Barker to a refund of the deposit. After a hearing, the trial court entered summary judgment for Price. In relevant part, the trial court concluded that the year of the van was not a term material to the deposit agreement because that “agreement makes no reference to the year of the vehicle;” that Barker had accepted the van when he inspected it and paid the deposit; and that the certificate of title that Price tendered satisfied his obligation under the deposit agreement. This appeal ensued.
JUDGE NAJAM We review the contract as a whole, attempting to ascertain the parties’ intent and making every attempt to construe the contract’s language “so as not to render any words, phrases, or terms ineffective or meaningless.”
Generally, Indiana’s courts apply the “four corners rule” to determine the parties’ intent in entering into a written contract…. That is, if the contract unambiguously demonstrates the parties’ intent, we will simply apply the contract as written and, generally, “parol or extrinsic evidence is inadmissible to expand, vary, or explain the instrument.” … However, the prohibition against the use of parol evidence “is by no means absolute.” … And “where the existence of a contract or the terms thereof is the point in issue, and the evidence is conflicting or admits of more than one inference, it is for the [trier of fact] to determine whether a contract in fact exists.”
We first consider Barker’s argument that the certificate of title presented by Price did not comply with the deposit agreement because the certificate showed a different model year for the van than the year specified in the advertisement. This issue turns on the scope of the deposit agreement, which is the only writing between the parties regarding sale of the van. The deposit agreement simply states that, in exchange for a \($2,000\) deposit, Price “will have title by 4/14/14” for a “Ford E–350 Van … Because the deposit agreement does not specify the model year of the vehicle, Price asserts that the year must not have been a material term.
As Price puts it, “the advertisement merged into the [deposit agreement].” We must agree with Barker that there is a genuine issue of material fact regarding whether the model year of the vehicle was a term material to the parties’ agreement.
We begin with a basic point: the deposit agreement does not contain the entire agreement between the parties. As our supreme court has explained:
An integrated agreement is a writing constituting the final expression of one or more terms of the parties’ agreement. Restatement (Second) of Contracts § 209 (1981). The question of whether an agreement is an integration is one of fact[ ] that[,] unlike other questions of fact, is decided by the judge as a question preliminary to application of the parol evidence rule…. In determining whether a writing is integrated, the judge should examine the writing itself to see whether it appears complete on its face and should also consider any other relevant evidence. Id.
The deposit agreement is not the entire agreement in that it omits at least one essential term, namely, the sale price for the van. And it does not contain an integration clause. Thus, we cannot agree with Price’s contention that the advertisement or any other prior negotiations “merged” into the deposit agreement….
To the contrary, it is apparent that the deposit agreement was only part of a larger agreement between the parties and that part of the agreement was not reduced to writing.
Likewise, we are not persuaded by Price’s argument that the deposit agreement speaks for itself when it omitted the model year from the vehicle’s description.
Price contends, in effect, that he could have produced a certificate of title for a Ford E–350 van manufactured in any year without affecting his deal with Barker.
When the entire agreement between the parties is taken into account, we cannot say as a matter of law that the model year was not a material term. Indeed, in most automobile sales, the model year is a material term. Both new and used vehicles are typically offered for sale and sold based, in part, on the model year. And there is usually a correlation between the model year and the sale price.
As the deposit agreement did not contain the entire agreement, it is necessary for the trier of fact to consider parol evidence. That is, the parol evidence rule, which operates to exclude “contemporaneous oral statements that contradict the terms of an integrated written agreement,” does not apply here because there is no integrated written agreement. (…[e]ven when the parol evidence rule does apply, there are numerous exceptions, such as using extrinsic evidence to show a mistake in the formation of a contract or “to apply the terms of a contract to its subject matter”).
Accordingly, whether the parties here considered the model year of the vehicle to be a term material to their agreement must be resolved by considering evidence extrinsic to the deposit agreement, including the original advertisement. The advertisement demonstrates that Price offered a 1994 vehicle, and the evidence suggests that Barker agreed to purchase the vehicle advertised. Thus, we must conclude that whether the year of the vehicle was a term material to the parties’ agreement is a question of fact that must be resolved by considering all the evidence, not merely a question of law based only on an interpretation of the deposit agreement. See id.
In sum, the deposit agreement is not the entire agreement between Barker and Price. Accordingly, the trial court erred when it concluded that the deposit agreement precluded Barker’s claim that the model year was a term material to the parties’ agreement for sale of the van. And we cannot say that the designated evidence otherwise shows that Price is entitled to judgment as a matter of law on this issue. We reverse the court’s entry of summary judgment for Price and remand for further proceedings. On remand, the court shall consider not only the deposit agreement but also extrinsic evidence to determine whether, as between the parties, the model year was a term material to their agreement.
CRITICAL THINKING:
What types of evidence, if it exists. do you think Price can offer when the case is retried that might lead to his being successful in the new trial?
ETHICAL DECISION MAKING:
What values are furthered by the court’s ruling in this case?