In a cereal contract, the grocery chain sues for nonpayment after repudiation, and the cereal maker introduces the contract, admitting the terms. The grocery chain seeks extrinsic evidence about a prize in boxes. Which evidence is properly admissible?

• A. Evidence of the prize in each box.
• B. Evidence of the box color.
• C. Evidence about the seven colors of rainbow and ingredients.
• D. Evidence of the store’s past price negotiations.

Answer: (A)

The key idea here is how the parol evidence rule handles extrinsic promises when a contract is written. A fully integrated written contract generally bars evidence of prior or contemporaneous statements that would alter or add to its terms. However, there’s an important exception: collateral or separate promises that don’t modify the written agreement may be proved by extrinsic evidence.

Evidence that there was a prize in the cereal boxes fits this exception. It points to a separate promotional promise outside the core contract terms between the grocery chain and the cereal maker. Such a prize is a distinct, collateral understanding rather than a term that would alter the written agreement’s payment or performance duties. Therefore, evidence showing that each box contained a prize can be admitted to establish that collateral aspect of the arrangement without contradicting or expanding the contract’s stated terms.

The other items don’t fit this use. Box color, rainbow colors, and ingredients concern packaging or product details rather than contractual terms between the parties or a separate collateral promise. Past price negotiations likewise tend to be excluded as they would either attempt to reinterpret the written agreement or be considered mere prior negotiations that don’t establish an admissible collateral term.