Four Corners Rule For Contract Disputes
The four corners rule contract law, also known as the patrol evidence rule, stipulates that if two parties enter into a written agreement, they cannot use oral or implied agreements in court to contradict the terms of the written agreement.
The term “four corners” refers to the four corners of a document.
Basically, it implies that the only legal parts of the contract are within the four corners of a page or online document. If there is evidence that exists outside of these four corners, they cannot be used in court if they directly contradict the terms of the written contract.
Types of evidence not valid in court due to the four corners rule include:
• Conversations about the signing of the contract
• Written evidence that is not part of the original written contract
• Comments from the defendant or plaintiff who are in a breach of contract case
Four Corners of a Contract
Because of the four corners rule, it is vital to include all promise and expectations you have of the other party in the original written contract. If you fail to do so and rely on spoken promises or guarantees made outside of the contract, enforcing them may prove problematic. Any judge looking at your case will look only at the four corners, not whatever verbal agreements you made. To protect yourself from this type of situation, it is a great idea to speak with a contract dispute attorney. They can look at the contract and make sure it is fair to both parties before you sign it. Never trust the other party if they say that you shouldn’t worry about a particular clause or statement. While you might be in agreement now, if things go south, you will have no legal support for making that party adhere to your wishes. There are certain times when outside evidence is useful for supporting a contract, but these are mostly limited to instances of fraud or other problems. If you are in trouble and think this might apply to you, contact a contract dispute attorney for assistance. They can determine whether or not you can use outside evidence in a courtroom to defend your case.
Times When Outside Evidence Can Be Used
There are only a few instances when outside evidence is permissible for supporting a written contract. These might include:
• To correct a mistake in the original contract.
• To clear up ambiguous language in the contract and help determine the original meaning.
• To assist the judge or jury understands the contract better.
• To clarify a transcription error in the original contract.
• To prove that the original contract is invalid.
• To prove that consideration was never offered for the two parties.
• To show that one party committed fraud, interference, unconscionable behavior, or was under duress when creating the contract.
• To make changes to the original contract if there is a clause that states oral amendments are permissible.
• To name the parties involved in cases of changing names.
Using the Four Corners Rule in Contract Disputes
If your contract is in dispute in court, the judge will definitely rely on the four corners rule to keep things as simple as possible. They will use your written documents to discover each party’s original intention and decide based off that unless you qualify for one of the exceptions listed above. The court will only use external evidence as much as it needs to clear up the ambiguity or discover the original intent of the contract.
Generally, the procedure for using the four corners rule is as follows:
• The judge will read the written contract and decide if extrinsic evidence is necessary.
• The court will enforce the contract as written without extrinsic evidence if not required.
• If extrinsic evidence is necessary the judge will use the entirety of the contract in addition to the new evidence to make a ruling that is fair.
Overall, a judge will not try to discover hidden meanings or obscure definitions. Instead, they’ll use the ordinary and straightforward meaning of words and clauses to determine how certain statements fit into the agreement as a whole.
Amending a Contract: When and Why
Written contracts play a vital role in both everyday life and in business. Without them, disputes would have to be decided by weighing one person’s word over another. Contract amendments are also often just as important as the contract itself. Amendments are used to add on forgotten provisions or address a need that became apparent after the contract began. A properly executed amendment is attached to the contract and treated as part of the deal. Without adding a contract amendment, the practices that are actually occurring or those forgotten aspects of the original contract may not be enforceable if a dispute arises. Of course, to have a valid amendment, you must first have a proper contract. As such, it is important to consider why you need a contract and how to create one.
Why You Need a Written Contract
Contracts can technically be either written or oral. Generally speaking, however, when someone refers to a “contract,” they usually mean a written document, while an oral contract is often referred to as an “agreement.” While an oral contract is often just as enforceable as a written contract, there are serious evidentiary issues if there is a dispute. It is much harder to prove what an oral contract contains because the evidence is usually based on “he said, she said.” Oral contracts are also simply not enforceable under the law for certain kinds of agreements, such as real estate purchase agreements or arrangements that are expected to last more than one year. It is always best to err on the side of caution when creating a written contract. The written agreement should contain every single portion of your agreement, both big and small. A contract is important for several reasons:
• It provides a description of each party’s rights and responsibilities – Perhaps the most valuable part of having a written contract is that it explains what each party should be doing under the agreement. It clearly describes each party’s role, which helps avoid confusion or disputes in the future.
• It establishes a time frame for deadlines – Deadlines are often an important part of agreements. Having a contract that specifically describes when each portion of a project should be completed can be helpful to avoid confusion.
• It provides recourse if problems arise – Written contracts should contain information about what will happen if one or both of the parties does not fulfill their obligations under the contract. It will also include steps to discontinue the relationship if problems arise.
• It lays out compensation or other responsibilities – A contract creates a binding legal document that sets out how much a party (or parties) will be paid for their work. If payment is not forthcoming, the contract can be used in a lawsuit to compel payment or, in some situations, specific performance of the responsibilities as set out in the document.
• It decreases costs associated with a dispute or litigation – You can incorporate clauses in the contract that deal with conflict resolution. Requiring a specific type of dispute resolution, such as mediation or arbitration, can significantly cut down on costs related to litigation. Using alternative dispute resolution (ADR) generally takes less time, effort, and money than arguing a contract dispute in court. You can also specify which state will have jurisdiction in the event of a dispute. This is particularly useful for contracts between parties that work or live in different states.
Contracts come in many forms, and they can be tailored to meet your needs. Purchase agreements and promissory notes are considered contracts despite the fact that they have a specific name.
When Do You Need a Contract?
Contracts are a good idea for virtually every relationship you have, whether it is in a business or personal setting. The following specific examples are instances that you should have a contract:
• You are creating a partnership and need a partnership agreement
• You need workers to commit to a non-disclosure agreement or confidentiality agreement
• You are entering a long-term or ongoing sales or purchase agreement with another party
• You are arranging for services to be rendered or a development of a product
• You need a written contract with a subcontractor or employee
• Your customers need to agree to terms and conditions when purchasing a product or using your services
• You are allowing another person to use your property or rent from you
Contracts are useful for a variety of situations. When in doubt, it is better to use a written agreement.
Types of Contract Breaches
There are two general types of contract breaches: minor and material breaches. A minor breach means that there has been a small deviation from the requirements of the contract. This kind of violation can usually be remedied, and some contracts include a certain amount of time in which the minor breach must be addressed. Generally, minor violations do not affect the most important portions of the contract, such as the price or when goods or services should be delivered.
A material breach, on the other hand, affects the vital aspects of the contract. There may be ways to fix the breach built into the contract, but a material breach is generally reason to void the contract completely.
Good Contract Language
The language in a contract is vital for contract enforcement. If the contract does not lay out the relationship between the parties properly, something that you thought was a breach may not be under the actual contract. In most circumstances, the contract is the “end all, be all” of the relationship. The law presumes that every agreement between the parties is encompassed within the contract. This is sometimes referred to as the “four corners rule.” It also means that the evidence outside the contract is not admissible. This concept is known as the “parol evidence rule.” It essentially signifies that you cannot enter evidence that extends beyond the contract to show what the arrangement was really like. This can be a serious problem for those trying to enforce provisions of the contract that were agreed upon between the parties but were never incorporated into the contract.
When Deviation from a Contract Is Not a Breach
Not every deviation from the specific language in a contract is considered a breach of contract. There are situations where the other party may “waive” certain provisions or where they may “consent” to specific non-material breaches. A party can waive certain terms of an agreement by their words or actions.
For example, if you breach the contract in a minor way, but the other party continues to do business with you regardless of the violation, then they may have “waived” that term of the agreement. The contract as a whole has not been voided, but that portion may not truly be “part” of the deal anymore. In other situations, a party may consent to a limited breach. If, for example, you are running behind on a delivery, which would violate the terms of the contract, the other party may give you permission to tack on some extra time to make the delivery. This consent does not alter the terms of future deliveries, but it modifies the agreement slightly so that you do not breach the contract.
Amending a Contract
In situations that require more than just a limited waiver or consent, a contract amendment may be appropriate. When you amend a contract, you change the original contract in some way. This can include adding, deleting, or correcting portions of the contract. The contract amendment does not replace the entire contract, but often substitutes a part of it. It is important that the modification is in writing so that it can be attached to the written agreement. Often, a contract will specifically state that any changes need to be made in writing, so it is imperative to be mindful of that type of language. Nonetheless, the requirement to put changes in writing is not always enforced in court. It is still a good idea regardless because it allows everyone to be on the same page about the specific terms of the amendment. If extensive changes are required, it might be better to simply create a new contract that has language based on the existing agreement.
Modification before the Contract Is Signed
Any change that occurs before the contract has been fully executed (signed) is not technically an amendment. You can change the terms of the contract before the parties sign it and it will be considered part of the initial contract. You can also make simple changes like correcting typos just before the contract is signed. Just make the change in pen and be sure that each party initials it.
When Do You Need a Contract Amendment?
Any time the relationship deviates from the original contract, you should amend the contract to reflect the actual practices of the parties. You may also need to make a change if some provision of the contract does not appear to be working as planned. There are also situations where outside forces, such as prices of component parts or changes in regulations, may affect the contract. It is a good rule of thumb to make an amendment any time the parties agree to a change. Getting the amendment in writing will be important to future contract enforcement.
• Compile your facts and evidence: Document the key details of the dispute. This could include dates, times, product or service details, warranties, photographs, leases, agreements or contracts and a summary of discussions or previous correspondence between the parties. Put your documentation in date order and highlight the parts that are most relevant.
• Keep calm and remain objective: Always remain calm, polite and professional in your spoken or written communications. Avoid abusive or emotional language, or laying blame. Try to understand the situation from the other party’s perspective.
• Think of creative solutions: Look for a ‘win-win’ solution that restores your business relationship. Make a list of possible solutions to discuss with the other party – be realistic and prepared to negotiate. Consider how achieving a particular solution (or not achieving it) will impact on your business particularly in terms of time, money and future working relationships.
• Talk to the other party: Contact the other party to negotiate a solution. Make sure the person you are talking to has the authority to settle the dispute. Sometimes minor issues can be handled with a phone call while other more complex matters are best dealt with face-to-face. Listen carefully to what the other party has to say and take notes. Don’t interrupt them while they are speaking, and when they have finished you should respond in a calm and non-threatening manner. If a solution is agreed to, make sure that you put it in writing and provide the other party with a copy.
• Formally write to the other party: If talking doesn’t work, the next stage is to write to the other party outlining your position. This provides another opportunity for the other party to resolve the dispute. It can also be used as evidence of your attempt to resolve the dispute if you need to use another means of resolution. Any letter should outline the matters in dispute, the steps that have been taking to resolve the matter, the required solution and a timeframe for this to occur. You may also want to include some of your documentary evidence. Email or post the letter and keep a copy for your records.
• Seek assistance: If you are still unable to resolve the dispute after talking and writing to the other party you may need to seek assistance from a third party. Be very cautious about resorting to litigation. Consider using an alternative method to resolve the dispute such as negotiation and mediation. These services are usually cheaper and less stressful than going to court.
When you need legal help from a contract attorney in Utah, please call Ascent Law LLC for your free consultation (801) 676-5506. We want to help you.
8833 S. Redwood Road, Suite C
West Jordan, Utah
84088 United States
Telephone: (801) 676-5506