Based on the following scenario, how might one understand parol evidence and the government's liability for reimbursing the private contractor for damages sustained due to flooding during...

Based on the following scenario, how might one understand parol evidence and the government's liability for reimbursing the private contractor for damages sustained due to flooding during construction?

A contractor entered into a contract with the government for the installation of improvements in a canal lining project that was intended to eliminate flood damage caused by severe rainstorms.  All rainwater was to be collected and channeled through the city into a nearby river.  The contractor sought reimbursement for damages and repairs to part of the work caused by severe rain during the construction.  The Permits and Responsibility Clause of the General Provisions placed the risk of loss for all pre-completion damage to permanent work on the contractor with the exception of damage caused by “flood or earthquake.”  In addition, the contract contained a very specific definition of flood. Unfortunately for the contractor, the high water that caused the damage to the project before completion did not meet this specific definition but did comply with a definition of flood in the procurement regulations, which were issued as general information by the government prior to this particular contract.  When the contractor attempted to introduce this other definition of flood and thus support its claim for reimbursement, the government objected on the grounds that this was parol evidence and thus inadmissible.

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Tamara K. H. | Middle School Teacher | (Level 3) Educator Emeritus

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Parol evidence is considered any evidence found in an oral or written agreement that was excluded from a written document. The rule concerning parol evidence was specifically developed to safeguard the "integrity of written documents or agreements" by eliminating the possibility that those involved can change the meaning of the written document by referring to other earlier oral or written agreements that are not specifically referred to in the written document (West's Encyclopedia of American Law, 2nd ed., "Parol Evidence"). Therefore, the government is asserting, since the earlier definition of flood was stated in an earlier written document that is not specifically referenced to in the Permits and Responsibility Clause of the General Provisions contract, the earlier definition counts as parol evidence and is not applicable to their later Permits and Responsibility Clause agreed upon by both the government and the contractor.

However, what the government is leaving out is that the parol evidence rule was also developed as a means of making sure all prior agreements, both written and oral, were fully integrated into the contract ("Parol Evidence Rule"). The parol evidence rule ensures that all previous oral and written agreements were merged into the written agreement. It should also be noted that the rule allows for differences between partial and complete integrations. A partial integration would "contain some, but not all of the terms" both parties agreed to in the earlier oral and written communications prior to the final written contract ("Parol Evidence Rule"). A complete integration contains all of the terms laid out in both the oral and written communications. Unfortunately, in terms of both partial and complete integrations, any evidence that contradicts the writing in the written document is excluded; however, "terms that supplement the writing" are admissible when the integration is partial, and the distinction between partial and complete integrations is a very gray area ("Parol Evidence Rule").

It's also important to note that procurement regulations are a list of rules governments must adhere to when awarding service contracts for projects to private companies. Procurement regulations ensure that the government acts fairly and handles tax-payers' money wisely ("Government Procurement Law & Legal Definition"). In contrast, a contract of general provisions only states the contractor's requirements and accountability for completing a project (The Law Dictionary, "What is General Contract Provisions?"). Hence, if there is both a contract of general provisions and procurement regulations, one could consider the general provisions to be only a partial integration. Therefore, if a definition of flood in the procurement regulations, a list of rules to guarantee the government acts fairly, contradicts a definition set out in the general provisions, the contractor may have a case based on the fact that the general provisions are a partial integration.

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