Hatley v. Stafford

Supreme Court of Oregon, 1978.

284 Or. 523, 588 P.2d 603.

Dawson, pp. 464-469


Facts: Hatley signed a lease to rent a farm from Stafford to grow wheat.  There was a provision in the contract that Stafford could buy out the lease at the rate of $70 per acre.  The contract didn’t say when Stafford could exercise the buy out option.  Hatley claimed that there had been an additional oral agreement that the buy out could only be done within the first 30-60 days of the lease.  Stafford came onto Hatley’s land and cut down the wheat in preparation for building a mobile home park.  Hatley sued for trespass.  The trial court allowed Hatley to introduce evidence of the oral agreement.  Hatley won, and Stafford appealed on the basis that Hatley shouldn’t have been allowed to use the oral evidence.


Issue: Should the evidence of the oral agreement been allowed?


Rule: The parol evidence can only be introduced if: (1) the oral agreement was not inconsistent with the written agreement, and (2) the oral agreement was such that it might “naturally” be made separately from the written agreement “by parties situated as were parties to the written contract”.


Analysis: The court says that a term of the oral agreement must contradict an express provision of the written agreement in order to be considered inconsistent with it.  Therefore, this part of the rule is satisfied because the written agreement doesn’t say anything about a buy out.


The next question is whether the buy out time limitation would have “naturally” been included in the written agreement.


The court finds it important, though not dispositive, that the contract appears on its face to be on such poor terms to the lessee in regard to the value of the wheat.


Conclusion: The court finds that the trial court was justified in admitting the parol evidence and that the question of whether the agreement was made was correctly left to the jury.


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