Arizona Law Review, Vol. 26, p. 793, 1984
52 Pages Posted: 14 Jul 2009
Date Written: 1984
The interaction of the parol evidence rule and the desire to honor the reasonable expectations of contracting parties has been the focus of considerable judicial and academic activity. It is in the realm of standardized agreements, generally policies of insurance, that courts and commentators have tried to come to grips with the disparity which sometimes exists between the language of a written contract and the alleged expectations of one of the contracting parties. Adopting the logic of the Restatement (Second) of Contracts, courts are now frequently speaking in terms of the 'reasonable expectations' of contracting parties when they determine whether the 'boilerplate' terms of a standardized agreement accurately reflect the 'true' understanding of the parties. Several hundred decisions have adopted, or at least acknowledged, this approach. Yet there has been little effort in the cases or the commentaries to explain when or how the so-called 'expectations principle is to be applied in disputes arising out of standardized agreements.
This article explores the roots of the parol evidence rule and examines the emergence of the expectations principle in standardized contract disputes. Despite changes in the nature and volume of commercial transactions, the policies and principles underlying the parol evidence rule are still valid today. The article also proposes a new standard for honoring the reasonable expectations of the parties to a standardized agreement while maintaining the integrity of written agreements, attempting to harmonize the parol evidence rule with the expectations principle.
Keywords: parol evidence rule, standardized contracts, expectations principle
Suggested Citation: Suggested Citation
Birnbaum, Gary and Stahl, Louis A and West, Michael P, Standardized Agreements and the Parole Evidence Rule (1984). Arizona Law Review, Vol. 26, p. 793, 1984. Available at SSRN: https://ssrn.com/abstract=1433866