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 admitted evidence tends to prove that at the time of the making of the final agreement of sale a further agreement was made that the car would be just as good as new, all the worn places thoroughly overhauled and that the plaintiff would guarantee it for a year. The writing signed by the parties appears on its face to be a complete contract, embracing all the particulars necessary to make a perfect agreement and designed to express the whole arrangement between the parties. The evidence therefore should have been excluded unless the oral agreement relates to a subject independent of, distinct from and collateral to the sale of the motor car. Dutton v. Gerrish, 9 Cush. 89, 55 Am. Dec. 45; Kite v. Comey, 118 Mass. 100; Puffer Mfg. Co. v. Krum, 210 Mass. 211, 213, 96 N. E. 139; Glackin v. Bennett, 226 Mass. 316, 115 N. E. 490. "We are of opinion that the oral agreement directly touched and concerned the use and enjoyment of the thing sold, that it was not a mere inducement for entering into the sale, that it was a part of the bargain of sale, and was not independent of or collateral to that sale. The case at bar can not be distinguished in principle from Brigham v. Rogers, 17 Mass. 571, wherein it was held that, where an estate was demised by lease, no action lay on a parol promise made by the lessor at the time of executing the lease, that the water on the premises demised would be good, and that there would be enough of it, and if not that he would make it so. This decision was approved in Durkin v. Cobleigh 156 Mass. 108, 30 N. E. 474, 17 L. R. A. 270, 32 Am. St. Rep. 436; Spear v Hardon, 215 Mass. 89, 102 N. E. 126 Naumberg v. Young, 44 N. J. Law, 331, 344, 43 Am. Rep. 380; Thompson Foundry & Machine Co. v. Glass, 136 Ala. 648, 654, 33 South. 811." MacAlman v. Gleason, 228 Mass. 454, 117 N. E. 795.
2 Naumberg v. Young, 44 N. J. L. 331, 342, 43 Am. Rep. 380 [cited and followed in McTague v. Finnegan, 54 N. J. Eq. 454, 35 Atl. 5421.
3 Kracke v. Homeyer, 91 Ia. 51, 58 N. W. 1056.
4 Kracke v. Homeyer, 91 Ia. 51, 53, 58 N. W. 1056.
5 Angell v. Duke, L. R. 10 Q. B. 174.
The rule which allows collateral consistent contracts to be enforced is unfortunately confused frequently with the rule which allows the use of extrinsic evidence to show the terms of a contract, a part of which only has been reduced to writing by a memorandum which shows on its face that it is incomplete, and which allows extrinsic evidence of the remaining terms of such contract, as far as they are consistent with the written terms.8 Many cases in which extrinsic evidence is admitted properly on the theory that the written contract shows on its face that it is incomplete, are explained on the theory that the contracts are collateral and consistent. If the distinction between the two rules is noted, cases which apparently are in conflict may frequently be reconciled. If a contract for the sale of a business appears upon its face to be complete, extrinsic evidence is inadmissible by the weight of authority to show the existence of a prior or contemporaneous oral contract by which the seller of such business agreed not to engage in such business thereafter in competition with the purchaser thereof.9 The fact that the contract for the sale of the business is prepared in great detail and is apparently intended to cover all the terms of the transaction, makes the admission of extrinsic evidence especially improper.10 The fact that the contract refers to the good will of the business and contains no covenant to refrain from competition, is regarded in some cases as conclusive of the fact that the parties considered the question of such a covenant and intended not to insert it, and accordingly extrinsic evidence of such a covenant is regarded as inconsistent with the contract.11 In some jurisdictions, however, the contract to refrain from competition is regarded as collateral to the contract for the sale of the business, and extrinsic evidence of an oral contract not to compete has been admitted.12 If a written lease or conveyance of property which is used in a certain business is executed and delivered, extrinsic evidence has been held admissible on the ground that such conveyance or lease does not purport upon its face to be a complete statement of the entire transaction.13 If a written contract of employment is incomplete upon its face, as where it purports to fix only the rate of compensation,14 a prior oral agreement to the effect that the employe would not compete with his employer after the termination of the employment may be shown.15 If the instrument which provides for a lease purports on its face to set forth the entire contract between the parties, extrinsic evidence of an oral agreement not to compete has been held to be inadmissible.16 The admission of evidence as to a collateral contract has also been justified on the theory that such collateral contract is an oral contract which is the consideration for the written contract or an inducement therefor.17
6Angell v. Duke, L. R. 10 Q. B. 174. 7 Angell v. Duke, 32 L. T. 320.
8 See Sec. 2151 et seq.
9 Arkansas. Harris v. Trueblood, 124 Ark. 308 [sub nomine, Sternberg v. Trueblood. 186 S. W. 836],
Massachusetts. Wilson v. Sherburne, 60 Mass. (6 Cush.) 68.
Rhode Island. Zanturjian v. Boor-nazian, 25 R. I. 151, 55 Atl. 199.
Virginia. Slaughter v. Smither, 97 Va. 202, 33 S. E. 544.
Washington. Gordon v. Parke & Lacy Machinery Co., 10 Wash. 18, 38 Pac. 755.
10Wessell v. Havens, 91 Neb. 426, Ann. Cas. 1913C, 1377, 136 N. W. 70.
A deed has been held not to merge an oral agreement by the vendor to construct a street if the vendee bought the land conveyed by such deed.18 A written contract with an agent for the sale of realty upon a commission, which provides that the principal agrees to furnish an abstract which shows clear title to the realty, does not prevent the admission of evidence to the effect that the principal had notified the agent that such title was subject to a reservation of certain mineral rights.19 A contract of compromise of dis-putes arising out of a contract of sale is not rendered inadmissible because of a subsequent written contract between the parties whereby one undertakes to act as the agent of the other.20
11 Weasel v. Havens, 01 Neb. 426, Ann. Cas. 1913C, 1377, 136 N. W. 70; Zanturjian v. Boornazian, 25 R. I. 151, 55 Atl. 199.
12Fusting v. Sullivan, 41 Md. 162; Locke v. Murdoch, 20 N. M. 522, L. R. A. 1917B, 267, 151 Pac. 298.
"In the case at bar it will be seen that the contract of September 23, 1910, was in reference to the sale of appellant's practice and certain of his office furniture, and was entirely silent as to the subject-matter contained within the parol agreement, which was subsequently put in writing. We therefore are constrained to hold that the general rule contended for by appellant has no application to the facts of this case, and that the court did not err in admitting evidence of the parol agreement made contemporaneous with the execution of the written contract, and not varying any of the terms thereof." Locke v. Murdoch. 20 N. M. 522, L. R. A. 1917B, 267, 151 Pac. 298.
13 Welz v. Rhodius, 87 Ind. 1, 44 Am. Rep. 747; Leineau v. Smart, 30 Tenn. (11 Humph.) 308.
14 Turner v. Abbott, 116 Tenn. 718, 6 L. R. A (N.S.) 892, 94 S. W. 64.
15 Turner v. Abbott, 116 Tenn. 718, 6 L. R. A. (N.S.) 892, 94 S. W. 64.
16Doyle v. Dixon, 94 Mass. (12 All.) 576.
17Locke v. Murdoch, 20 N. M. 522, L. R. A. 1917B, 267, 151 Pac. 208.
See Sec. 1204 and 2165.
18 Drew v. Wiswall, 183 Mass. 554, 67 N. E. 666.
Accordingly, the better rule is that if the written contract is incomplete on its face, then by the operation of a different principle, any oral term consistent with the writing may be enforced, while if the contract is complete on its face, and the principle of the collateral consistent contract is invoked, only such contracts as are really collateral to the written contract can 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.21 Where certain securities are deposited under a written contract and receipt, an oral contract under which other securities are deposited is enforceable.22 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.23 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.24 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.25 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.26
19Appleby v. Sperling, 194 Mich. 681, 161 N. W. 873.
20 Empire Cream Separator Co. v. Bair, 180 Ia. 375, 159 N. W. 976.
21 Collimovood 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 therefore not allowed to recover.)
22 Blackwood v. Brown, 34 Mich. 4.
23 See Sec. 2151.
24 Cloud v. Markle. 186 Pa. St. 614, 40 Atl. 811.
25 Ryder v. Faxon, 171 Mass. 206, 68 Am. St. Rep. 417, 50 N. E. 631; Searle v. Roman Catholic Bishop, 203 Mass. 493, 25 L. R. A. (N.S.) 992, 89 N. E. 809.
26Redfield v. Gleason, 61 Vt. 220, 15 Am. St. Rep. 889, 17 Atl. 1075.