The Supreme Court in the recently decided opinion of Williams v. Spitzer Autoworld Canton, LLC (2009), 122 Ohio St.3d 546, 2009-Ohio-3554, announced an important decision for businesses who deal with consumers, by upholding the parol evidence rule. In this case, the Court used the parol evidence rule and refused to allow a consumer to claim that an auto dealer changed the terms of a deal when the paperwork was complete. This decision will not only apply to auto dealers, but will also apply to other retailers and suppliers who deal with consumers. Consumers will now have a difficult time proving that the terms of a contract were anything other than what was written in the final contract.
The parol evidence rule is a long-established rule which upholds the integrity of contracts. The rule, simply stated, provides that absent fraud or mistake, or some other compelling reason, when parties enter into a final written contract, the terms of that contract should not be varied, contradicted, or supplemented by prior or contemporaneous oral agreements or prior written agreements. This long-standing rule seeks to ensure the stability, predictability, and enforceability of a finalized written contract.
The Williams case stemmed from an automobile sale. Mr. Williams sought to trade-in his vehicle and purchase a new one from Spitzer. At the trial, Williams alleged there was an oral agreement before the final sale which valued his trade-in at $16,500. However, it was undisputed that the final contract listed the trade-in value of the vehicle as $15,500. Williams claimed he did not look at the contract at the time of the sale to verify the trade-in value because he was only concerned with the monthly payment amount.
At trial, Spitzer introduced testimony from the sales associate and the finance manager, both of whom discussed with Mr. Williams’ the value of his trade-in. The sales associate testified that he never promised a $16,500 trade-in allowance on Mr. Williams’ vehicle. The finance manager testified that he reviewed the final purchase agreement with Mr. Williams, including the trade-in allowance of $15,500. The jury ultimately concluded that Spitzer had violated the Ohio Consumer Sales Practices Act (“CSPA”) by orally promising Williams $1,000 more for his trade-in than he actually received in the purchase agreement.
Claims brought under the CSPA can be dangerous. If a party violates the CSPA, the injured party is entitled not only to damages, but these damages are often tripled by statute. Generally, attorney’s fees are also included in an award when a violation of the CSPA is found. Because of this, claims brought under the CSPA can easily become class action lawsuits.
After losing at the trial court level, Spitzer appealed to the Fifth District Court of Appeals and argued that the parol evidence rule barred the introduction of a prior oral agreement which contradicted the final written purchase contract. The Court of Appeals rejected this argument and stated that a claim brought pursuant to the CSPA was not based on contract, but instead on the oral misrepresentation. The Supreme Court disagreed and ultimately held that the parol evidence rule applied to actions brought under the CSPA. The parol evidence rule is a substantive law, and cannot be trumped by the CSPA.
The Williams case represents an important win for retailers and suppliers. Under the CSPA, judges, acting pursuant to the CSPA, have long permitted oral statements to be introduced as evidence which contradicts a written contract. These situations were further compounded by juries who were sympathetic to consumers in cases between consumers and suppliers. This recent decision by the Supreme Court does more than uphold a long- standing legal principal. This decision reassures retailers and suppliers that when entering into a written contract, that contract will be interpreted by the terms contained within it.
If you would like a full copy of the opinion, or have any questions regarding matters of Finance, Consumer Transactions, or Creditor Rights and Liabilities, please feel free to call one of our Financial Institution and Creditor Rights and Liabilities Practice Area Members.
