Evidence Of Oral Promises Is Barred

In July of 2009, the Supreme Court of Ohio held that a provision of Ohio’s Administrative Code is unconstitutional and invalid to the extent that it allows state courts to consider “parol evidence” of alleged oral promises or representations made by a vendor to a consumer that are contrary to the terms of a written contract signed by the parties.

In the decision, the Court also held that the parol evidence rule applies to lawsuits brought under the Ohio Consumer Sales Practices Act (CSPA), and that absent proof of fraud, mistake or other invalidating cause, the rule bars consumers seeking to prove violations of the CSPA from presenting extrinsic evidence that is contrary to the parties’ final written contract.

Under the parol evidence rule, if an agreement between parties has been reduced to a signed, written contract, and that contract includes language stating that all terms and conditions of the agreement are set forth in the contract and no other terms or conditions previously discussed by the parties are binding on the parties, then neither party may later introduce “parol” evidence (evidence of alleged verbal or written commitments outside of the signed contract) to seek additional compensation or concessions from the other party.

In the case, a buyer purchased a vehicle from an auto dealer. As part of that transaction, he traded in his older vehicle. The sales agreement signed by both parties indicated that the dealer had credited him with a trade-in allowance of $15,500 toward the purchase price of the new vehicle.

Two years later, the buyer filed suit against the dealer alleging that the dealer had committed multiple violations of the CSPA in the course of the transaction. At trial, the buyer testified that the dealer representative with whom he negotiated the transaction had orally committed to a trade-in allowance of $16,500 for his old vehicle, but then reduced the allowance stated in the sales contract to $15,500.

The jury found that the dealer knowingly violated the CSPA by orally promising the buyer $1,000 more than it provided in the written purchase agreement, and it awarded him $2,500 in compensatory damages.

The trial court then entered a judgment in favor of the buyer, imposed treble damages pursuant to the CSPA, and ordered the dealer to pay the buyer’s attorney fees.

The dealer appealed and the 5^th District Court of Appeals affirmed the judgment of the trial court. The dealer sought and was granted Supreme Court review of the ruling.

In the decision, the Supreme Court wrote: “(W)e have previously recognized that the parol evidence rule has application to claims beyond those sounding in contract. In Ed Schory & Sons (1996), we applied the parol evidence rule to a claim alleging the tort of negligent misrepresentation, and we emphasized that ‘the parol evidence rule will not be overcome by merely alleging that a statement or agreement made prior to an unambiguous written contract is different from that which is contained in the contract.’ ... Because the parol evidence rule is substantive in nature and not limited in application to contract claims, we conclude that it also applies to statutory causes of action such as the CSPA.” Essentially, the Court will rely on the written contract if these are conflicting oral promises.

For the full opinion, visit:

http://www.supremecourt.ohio.gov/rod

/docs/pdf/0/2009/2009-Ohio-3554.pdf

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