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 rule that a written contract merges all prior and contemporaneous oral negotiations, applies only to such oral negotiations as concern the subject-matter embraced in the written contract.1 Accordingly, a contract collateral to a written com-plete contract may be shown by extrinsic evidence if not contradictory.2 Thus an oral contract by an actress for the fall and winter may be enforced, though she had made a contemporaneous written contract for the summer.3 So an oral contract to pay commissions on a sale of realty in addition to the price fixed in the written contract,4 an oral contract not to sell other lots at less than a given price,5 an oral contract that the vendor shall keep the realty contracted for insured for the benefit of the vendee,6 an oral contract made when a note is given to a bank to allow a deposit in the bank to be credited thereon,7 and an oral contract that the vendee of stone should have a derrick ready to receive the stone and should settle any controversy over the amount of stone furnished, as shown by the tickets given by vendor before using the stone,8 are all of them so far collateral to the written contract as to be enforceable. So an oral contract to extend a lease under certain contingencies has been held so far collateral to the lease as to be enforceable.9 So in an action on a note the whole transaction under which the note was given may be shown, and a counterclaim may be based on an oral contract collateral to the note, as on an oral contract to repurchase the stock for which the note was given,10 or to redeem in gold the bank-notes for which the note was given,11 or to place certain claims in the hands of the maker of the note to collect on commission.12 Where a note was deposited with A as collateral under a written contract, an oral agreement that A should not collect it could not be enforced; but an agreement that the payee should collect it as agent for A, was held to be a collateral consistent contract, and enforceable.13 Where A had given B a promissory note, an oral contract whereby B was to collect certain rent for A, and credit upon A's debt, is enforceable.14 Where a note is given,15 or a bill of exchange drawn,16 an oral contract that a set-off existing in favor of the maker or bearer was not waived, may be enforced. So, where A bought a draft from B, intending to use it in the purchase of cattle, an oral agreement that if A did not make such use of the draft he could return it to B, and receive credit therefor on his account with B, can be enforced.17 Where certain securities are deposited under a written contract and receipt, an oral contract, under which other securities are deposited, is enforceable.18 The cases in which the action was based on a note may however be explained on the theory that the note was not a complete contract.19 Where a written bond has been given for the purchase of realty, an oral contract has been enforced giving the vendee the right to rescind the contract and receive back his bond and mortgage given therefor.20 An oral contract that a building erected by a lessee upon the leased premises, shall be the personal property of the lessee, is so far collateral to a written lease that it can be enforced.21 Under a contract between two co-owners of realty, whereby one of them agreed to sell his interest in such realty to the other for a specified consideration, an oral agreement that outstanding partnership accounts between them should be settled, and the balance due from the vendor to the vendee should be applied upon the purchase price, has been held enforceable.22
12 United States v. Peck, 102 U. S. 64.
13 Crane Co. v. Specht, 39 Neb. 123; 42 Am. St. Rep. 562; 57 N. W. 1015.
1 Grand Forks, etc., Co. v. Tourte-lot, 7 X. D. 587; 75 X. W. 901.
2 Savings Bank v. Asbury, 117 Cal. 96; 48 Pac. 1081; King v. Dahl, 82 Minn. 240; 84 X. W. 737; Germa-nia Bank v. Osborne, 81 Minn. 272; S3 X. W. 1084; Brown v. Bowen, 90 Mo. 184; 2 S. W. 398; Huffman v. Ellis, 64 Neb. 623; 90 N. W.
552; Qnigley v. Shedd, 104 Tenn. 560; 58 S. W. 266.
3 Drake v. Allen, 179 Mass. 197; 60 N. E. 477.
4 Hall v. McNally, 23 Utah 606; 65 Pac. 724.
5 Rackemann v. Improvement Co., 167 Mass. 1; 57 Am. St. Rep. 427; 44 N. E. 990.
6 Keefer v. Ins. Co.. 29 Ont. 394; Parcell v. Grosser, 109 Pa. St. 617; 1 Atl. 909.
7 Roe v. Bank, 167 Mo. 406; 67 S. W. 303.
8Mt. Vernon Stone Co. v. Sheely, 114 la. 313; 86 N. W. 301.
9 Armington v. Stelle, 27 Mont. 13; 94 Am. St. Rep. 811; 69 Pac.
115 (under Sec. 2186 of the statutes of Montana).
10 Germania Bank v. Osborne, 81 Minn. 272; 83 N. W. 1084.
11 Racine County Bank v. Keep, 13 Wis. 209.
12 Singer Mfg. Co. v. Potts, 59 Minn. 240; 61 N. W. 23.
13 Jenkins v. Shinn, 55 Ark. 347; 18 S. W. 240.
14 Stebbins v. Lardner, 2 S. D.
127; 48 N. W. 847; Jones v. Keyes, 16 Wis. 562.
15 Bennett v. Tillmon, 18 Mont. 28; 44 Pac. 80.
16 Bohn Mfg. Co. v. Harrison, 13 Mont. 293; 34 Pac. 313.
17 Collingwood v. Bank, 15 Neb. 118; 17 N. W. 359. (In this case, however, while such contract was enforceable, A had delayed the return of the draft an unreasonable time, and the drawee had become insolvent in the meantime. A was therefor not allowed to recover.)