W.W.W. Associates, Inc. v. Giancontieri

New York Court of Appeals · 1990 · Contracts

ContractsParol EvidenceContract InterpretationReal Property Sale Contractsparol evidence ruleintegration clausemerger clauseambiguity

Facts

Defendants contracted to sell a two-acre parcel to plaintiff under a written contract that included paragraph 31, providing that if pending litigation affecting the property was not concluded by June 1, 1987, either party could cancel the contract and the down payment would be returned. The contract also contained a merger clause stating that all prior understandings were merged into the contract, and elsewhere expressly granted certain cancellation options to the purchaser alone. When the litigation remained unresolved as June 1 approached, plaintiff attempted to close and filed an action for specific performance. Defendants then canceled the contract on June 2 and returned the down payment, while plaintiff argued through extrinsic evidence that paragraph 31 had actually been intended solely for plaintiff's benefit and was therefore subject to plaintiff's unilateral waiver.

Issue

Whether a facially unambiguous contractual provision giving either party the right to cancel if specified litigation remained unresolved by a certain date may be reinterpreted through extrinsic evidence as a condition included solely for the purchaser's benefit and therefore waivable only by the purchaser. Also, whether extrinsic evidence may be used to create an ambiguity in an otherwise complete and unambiguous written agreement.

Rule

When parties reduce their agreement to a clear, complete writing, the contract should generally be enforced according to its terms. Extrinsic or parol evidence is inadmissible to add to, vary, or create an ambiguity in a written agreement that is complete, clear, and unambiguous on its face, especially where the contract contains a merger clause.

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Nora Feld and Lakeview Artisan Lofts, LLC signed a written contract in Buffalo for the sale of a warehouse. The contract stated that if an environmental cleanup order was not lifted by September 1, "either party may cancel this agreement and the deposit shall be returned," and it also contained a merger clause. After September 1 passed without resolution, the buyer offered emails from negotiations showing both sides supposedly meant the clause only to protect the buyer.

If the seller cancels after September 1, how should a court most likely rule on the buyer's claim for specific performance?

Explanation. A clear, complete, unambiguous written agreement must be enforced according to its terms. Where the contract expressly gives "either party" the right to cancel and includes a merger clause, extrinsic evidence is inadmissible to vary that writing or recast the clause as solely for one side's benefit. The seller may therefore enforce the cancellation as written. (Derived from W.W.W. Associates, Inc. v. Giancontieri (1990).)