What is UCC 2-202

Last updated on August 3, 2023

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The Uniform Commercial Code is a detailed set of laws, each with separate sections that go over varying parts of commercial transactions. Every little portion is vital, including portion 202 under Article 2 of the Uniform Commercial Code. What does this part of the law go over?

UCC 2-202 is a specific provision in the Uniform Commercial Code. It says that evidence of any understanding made before or contemporaneous to a written contract may be allowed to supplement the terms of the written legal document if the conditions are consistent with the paperwork. The written contract must also not exist as an exclusive display of the partners’ transaction.

If you're curious to learn more about UCC 2-202, you’re in the right place. It’s helpful to have a solid grasp of the inclusions in the Uniform Commercial Code, especially if you will be involved in a transaction under these rules sometime shortly.

What Is UCC 2-202?

There are many variations of smaller sections within the overarching Articles of the Uniform Commercial Code. UCC 2-202 goes to work often, and it’s helpful to understand what it means before taking part in any deals or legal proceedings involving the UCC.

Section 2-202 of the Uniform Commercial Code makes the following statements:

• Evidence of any understanding created before or contemporaneous to a documented contract may supplement the terms of a written contract if the terms work with the contract and are consistent.
• The written contract does not exist as an exclusive display of the partners’ transaction.

These items are the core of the UCC 2-202.

This section, often referred to as the “Parol Evidence Rule”, exists to formulate substantive contract law and clarify items ahead of time between the parties involved in the deal. It’s meant to be the final expression of agreement between the individuals and applies to any written agreement.

Why Is It Called the Parol Evidence Rule?

This section is the “Parol Evidence Rule” because it refers to the preference given to written statements, as opposed to those made verbally or by other means. It also allows individuals involved in the contract to produce written or oral proof to contradict or supplement the writing as a final say.

Parol evidence may be utilized to remove written or oral evidence made before creating the written agreement and oral agreements contemporaneous with the current contract. This rule is considered a regulation of substantive contract law rather than a rule that others would denote under “evidence”.

Of course, there are vital exceptions to consider to the Parol Evidence Rule. Let’s dive into them next.

What Are the Exceptions To the Parol Evidence Rule?

As with any rules and regulations, there are always exceptions to consider. There are two major ones to consider when examining the Uniform Commercial Code 2-202. These may impact the effectiveness of the rule in a court of law.

The exceptions include the following:

• Collateral contract exception
• Ambiguity exception

These are vital to consider.

Let’s dive into these exceptions to help you further understand the exemptions to this regulation under the Uniform Commercial Code. The better you know these items, the easier it will be to work through UCC 2-202.

Collateral Contract Exception

First, is the collateral contract exception. In this segment, the court will examine any preliminary evidence to decide if there was any partial integration of the contract. The document must meet three specific conditions.

These conditions include the following items:

• The extrinsic agreement cannot contradict the implied or express provisions in the written contract.
• The extrinsic agreement must be a collateral one in form.
• The extrinsic agreement must be one that either party would not typically be expected to create in a written form.

The contract must meet these three conditions for the collateral contract exemptions to receive consideration.

The court uses an “ordinary or natural test” to see if the extrinsic agreement is one someone might reasonably anticipate from the one in the written contract. If so, a collateral contract exception might become applicable to the situation.

Ambiguity Exception

Next is the ambiguity exception. This one is a little different from the collateral contract exception counterpart.

Sometimes, the words used in a contract could mean more than one thing. If the court deems this issue the problem, they allow parol evidence to decide what the language means using the ambiguity exception. They may use statutory construction to determine if the language is ambiguous or has one meaning.

The judge must examine all available evidence in the situation to determine the actual intention of both involved parties. This ability is the justification for the ambiguity exception. If the judge finds that any individuals have goals that fall into a side agreement, this item will typically supersede a written legal work of any kind.

What Is Violation of the Parol Evidence Rule?

There are exceptions to the parol evidence rule, and there are also violations to consider. These violations will make any agreement made outside the contract admissible, while all others are inadmissible in a court of law.

Three instances would be considered a violation of the parol evidence rule:

• Fraud
• Duress
• Mutual mistake

Keep these in mind if you work with the UCC in a court of law for a contract.

Consider these violations of the parol evidence rule in a court of law. If there is a sign of fraud, duress, or a mutual mistake, it will make the contract admissible in a court of law. Otherwise, consider it inadmissible.

What Are Examples of the Parol Evidence Rule?

It can be tricky to understand parol evidence without a good example. Let’s go over a few instances where parol evidence comes in handy.

Here are some examples of the parol evidence rule:

• Two parties agree on a contract for a specific exchange of a good and cash on a set date. One gets the product, the other does not provide funds for the received item. The wronged party sues and wants more money for the failure to pay, which is parol evidence because it wasn’t in the initial contract created before the error from the person with the responsibility to pay the other involved individual.
• A couple hires an individual to take pictures for a wedding and they sign a contract with the artist agreeing to a specific amount of time worked and payment for his services. Everyone signs, but a few days before, the photographer says he must cut his time in half. The couple sues and the man may not use his verbal evidence of the phone call to prove his case. This portion is parol evidence because it wasn’t in the initial legal document.

Anything additional outside the original contract is considered parol evidence in a legal court case.

If any of these situations appear when dealing with a contract, UCC 2-202 may come in handy to bring things to light and clarify the situation. All listed wrongdoings will make parol evidence admissible.

Under What Circumstances Would Parol Evidence Be Admissible?

Parol evidence is admissible if there is proof of fraud, duress, or a mutual mistake between the parties. It is admissible to prove any grounds would make the contract drawn between the parties void.

Other circumstances that would allow parol evidence to become admissible besides the three previously stated include the following items:

• Lack of consideration
• Illegality

These would allow the inclusion of parol evidence in a court case between two parties.

If any of these situations appear when dealing with a contract, UCC 2-202 may come in handy to bring things to light and make the situation clearer. All listed wrongdoings will make parol evidence admissible.

What Does UCC Article 2 Apply To?

UCC 2-202 exists within Article 2 of the Uniform Commercial Code. Article 2 is an overarching category - what does this section apply to in any business or commercial transaction?

Article 2 deals with the “sales of goods” across the country. It works with most tangible, movable items. “Goods” may include rigs, pumps, electronics, food products, compressors, aircraft, and more.

What Types of Contracts Fall Under UCC Article 2?

As with the application of Article 2 of the Uniform Commercial Code, contracts that fall under this section deal with the general sale of goods. The UCC provides specifications for what might be considered a “good” in a contracted sale.

Goods must:

• Be identified during the formation of the contract and moveable from one place to another.
• Exist as a physical item, like a boat or a car. Items like intellectual property and real estate are not considered goods.

These define what falls under the sale of goods.

Each section, such as UCC 2-202, further defines and regulates sales of these goods between two merchants. It’s a good idea to be well-versed in every aspect for the best legal experience with a contract.

Reference Legal Explanations

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