This section is from the book "The Law Of Contracts", by William Herbert Page. Also available from Amazon: Commercial Contracts: A Practical Guide to Deals, Contracts, Agreements and Promises.
The principle that the consideration may be shown has been extended to cases where an oral contract has been proved as a consideration for the written contract, or as the courts sometimes put it, as an inducement for the written contract.1 On this theory an oral contract to advance money may be shown as an inducement for a written contract to gather, cure and deliver a crop of raisins at a certain price; and breach of the oral contract may discharge the written contract.2 In an action on a note an oral contract to enforce payment by exhausting security in the form of a conveyance of realty in trust before proceeding against the maker of the note may be shown.3 The holding in this case rests on the theory that it is fraud to obtain a note under such an agreement and then enforce it literally. The parol evidence rule has a peculiar meaning in Pennsylvania, however,4 being at law substantially the same as in suits in equity for reformation.5 So an oral contract to give certain logs as security may be shown as inducement for a written contract of sale of such logs.6 So an oral contract by an owner of realty to put in a side track may be shown as an inducement for a written contract to build.7 So, in Pennsylvania, an oral contract giving vendee the right to countermand a written order may be shown.8 So if A becomes surety for B to C an oral contract of agency may be shown as consideration for the written bond, no consideration being expressed.9
28 Field v. Austin, 131 Cal. 379; 63 Pac. 692.
1 Langley v. Rodriguez, 122 Cal. 580; 68 Am. St. Rep. 70; 55 Pac. 406; In re Sutch's Estate, 201 Pa. St. 305; 50 Atl. 943; Clinch Valley, etc., Co. v. Willing, 180 Pa. St. 165; 57 Am. St. Rep. 626; 36 Atl. 737; Huckestein v. Kelly, etc., Co., 152 Pa. St. 631; 25 Atl. 747; Ferguson v. Rafferty, 128 Pa. St. 337; 6 L. R. A. 33; 18 Atl. 484.
2 Langley v. Rodriguez, 122 Cal.
580; 68 Am. St. Rep. 70; 55 Pac. 406.
3 Clinch Valley, etc., Co. v. Willing, 180 Pa. St. 165; 57 Am. St. Rep. 626; 36 Atl. 737.
4 See cases cited in notes 5-8 this section.
5 Thomas v. Loose, 114 Pa. St. 35; 6 Atl. 626.
6 Ferguson v. Rafferty, 128 Pa. St. 337; 6 L. R. A. 33; 18 Atl. 484.
7 Huckestein v. Kelly, etc., Co., 152 Pa. St. 631; 25 Atl. 747.
So where a contract for judgment and stay of execution until the next term of court was entered into, an oral agreement that all matters in litigation up to the date of the contract were included and that a rent for the future was agreed upon may be shown.10 So under a deed an oral contract that the grantor should have the right to sow a crop of grain on the land conveyed may be shown.11 So an oral contract to bequeath a certain amount may be shown as consideration for a written release.12 So under a written contract to donate rent of a building to be used by a corporation to be formed, an oral contract that rent in arrears should be paid before the corporation was formed may be shown.13 Evidence of an oral contract by way of inducement must be clear.14
Many of the cases which rest on this principle may be explained on other theories. In some the written memorandum is incomplete. In others the consideration is recited as a fact. After eliminating these cases, however, there are a number left which really support the principle laid down. If these cases are correctly decided there is little left of the parol evidence rule. It does not apply to recitals of fact. If, further, it is held not to apply to contractual terms which form part of the consideration, it is hard to imagine any term of an oral contract to which it would apply. The principle seems contrary to that which forbids oral evidence of the consideration to vary contractual terms,15 or to add to a complete contract.16
8 Thomas v. Loose, 114 Pa. St. 35; 6 Atl. 626.
9 Singer Mfg. Co. v. Forsyth, 108 Ind. 334; 9 N. E. 372.
10Bonney v. Morrill, 57 Me. 368.
11 Breitenwischer v. Clough, 111 Mich. 6; 66 Am. St. Rep. 372; 69 N. W, 88 (distinguishing Addams v. Watkins, 103 Mich. 431; 61 N. W. 774, as a contract for the reservation of a crop already growing; and hence inconsistent with the deed).
12 Andrews v. Brewster, 124 N. Y. 433; 26 N. E. 1024.
13 Chase v. Creamery Co., 12 S. D. 529; 81 Pac. 951.
14 In re Sutch's Estate, 201 Pa. St. 305; 50 Atl. 943.
15 See Sec. 1205.
16 See Sec. 1189.