The Georgia Supreme Court ruled recently in a contracts case what should be no surprise, as a general rule. The terms of a contract govern and trump parol (oral) statements to the contrary. When a contract is written, it usually includes a provision called an “Entire Agreement” clause. An Entire Agreement clause says the terms of the contract are completely and totally included within the four corners of the contract and that there are no other terms whatsoever other than what is included in the written document.

The facts of the case before the Georgia Supreme Court involved a high-rise condominium in Atlanta. The sales person who sold a couple a condominium perched high in the air talked about the views and scenery and this turned out to be the selling point that induced the buyers to buy. The contract they signed included disclaimers regarding the future scenery and how the seller could not guarantee the scenery would always be as magnificent as it was the day the buyers bought their condominium.

As you can imagine, the views and scenery did not stay the same. Another high rise condominium was built that impeded the couples’ views and scenery and they sued the seller. The court’s ruling affirmed a long and well-established legal principle regarding the interpretation of contracts that include an Entire Agreement clause. No matter what anyone says to the contrary, the terms included in a contract govern and remain inviolate.

There are exceptions to this rule of law. The exceptions are found in the Parole Evidence rule. However, those are special circumstances that can apply but require exceptional circumstances to be applicable and are beyond the scope of this article. Despite the Parole Evidence rule, it is better to rely upon what you know to be the general rule, the written terms trump non-written, oral statements.

So, if you are negotiating a contract and are being told something that is not included in the contract, you will most likely not be able to rely upon what was said in terms of having those terms govern your relationship with the other party. In other words, the fact the other party said the views would be spectacular as they are today tomorrow is not going to help you in court. That representation needed to be put in writing for the buyer to be able to hold the seller accountable to those statements.

Categories: Real Estate Law


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