Opinion ID: 1176061
Heading Depth: 1
Heading Rank: 4

Heading: Resort to Parol Evidence

Text: The Court of Appeals reasoned that parol evidence is necessary to determine the effect of the disclaimer found in the handbook, and therefore that the three-year statute of limitations applicable to oral and partly oral contracts applies as a matter of law. We disagree. Parol evidence questions take varying forms where contracts are concerned. Interpretation of contracts may require the use of parol evidence. `[P]arol evidence is admissible... for the purpose of ascertaining the intention of the parties and properly construing the writing.' Berg v. Hudesman, 115 Wash.2d 657, 669, 801 P.2d 222 (1990) (quoting J.W. Seavey Hop Corp. v. Pollock, 20 Wash.2d 337, 348-49, 147 P.2d 310 (1944)); see also, e.g., U.S. Life Credit Life Ins. Co. v. Williams, 129 Wash.2d 565, 570, 919 P.2d 594 (1996). Parol evidence admitted to interpret the meaning of what is actually contained in a contract does not alter the terms contained in the contract. Thus, use of parol, or extrinsic, evidence as an aid to interpretation does not convert a written contract into a partly oral, partly written contract. Moreover, the parol evidence rule precludes use of parol evidence to add to, subtract from, modify, or contradict the terms of a fully integrated written contract, i.e., one which is intended as a final expression of the terms of the agreement. Berg , 115 Wash.2d at 670, 801 P.2d 222; U.S. Life, 129 Wash.2d at 570, 919 P.2d 594; In re Marriage of Schweitzer , 132 Wash.2d 318, 327, 937 P.2d 1062 (1997). Because parol evidence is not admissible to add to, subtract from, or alter the terms of a fully integrated written contract, no issue can arise as to the effect such evidence could have on the statute of limitations question. Where a partially integrated contract is involved, [2] parol evidence may be used to prove the terms not included in the writing, provided, of course, that the additional terms are not inconsistent with the written terms. Emrich v. Connell, 105 Wash.2d 551, 556, 716 P.2d 863 (1986). In contrast to the situation where a fully integrated written contract contains all the essential elements of a contract and the six-year statute of limitations applies, where resort to parol evidence is required  to establish any material element,  the contract is partly oral and the three-year statute of limitations applies. Cahn, 33 Wash.App. at 841, 658 P.2d 42 (emphasis added), cited in Barnes, 128 Wash.2d at 570, 910 P.2d 469. (As in the case of a fully integrated written contract, parol evidence is admissible in any event as an aid in interpreting the meaning of the terms contained in a partially integrated contract.) Under Swanson, 118 Wash.2d at 528-39, 826 P.2d 664, parol evidence may be admissible to establish the effect of a disclaimer in an employer handbook. [3] If a disclaimer stating that a writing is not a contract is found to be effective, it necessarily follows that the handbook is not a contract, much less a contract in writing for purposes of RCW 4.16.040(1), and the six-year statute of limitations does not apply. Perhaps of more significance to this case is that parol evidence used to determine the effectiveness of such a disclaimer does not add oral terms to an agreement, but instead serves to ascertain the intended meaning of what is contained in the writing. If a purported disclaimer in an employee handbook is found to be ineffective, the remainder of the handbook may very well contain all the essential elements of a contract depending upon whether the obligations and liabilities of the parties can be determined by reference to the handbook. If so, the handbook might constitute a written contract to which the six-year statute of limitations should apply. Therefore, where it is alleged that an employee handbook containing such a disclaimer is nevertheless a fully integrated written contract, the question of the effectiveness of the disclaimer may require resolution before the statute of limitations issue can be resolved. [4]