## Facts

- M. M. Matthews worked for Drew Chemical Corporation as a salesman in an assigned territory.
- Over time, Matthews and Drew used written documents titled “MEMO OF EMPLOYMENT AGREEMENT” that listed employment terms such as pay, bonus, expenses, duties, territory, required reports, and termination.
- The memorandum included a termination provision stating: “Employment may be terminated at any time by either party to this Agreement giving notice to the other party.”
- The memorandum also required reporting, including “daily reports,” a “weekly recap sheet,” and other routine reports as required.
- Drew ended Matthews’s employment and asserted that the written memorandum created an at-will relationship that either party could terminate upon notice.
- Drew also argued that Matthews failed to follow instructions concerning submission of required reports, which Drew claimed justified discharge.
- Matthews sued Drew in federal court under diversity jurisdiction for wrongful discharge and also asserted a separate claim under the Age Discrimination in Employment Act (ADEA).
- Matthews contended the written memorandum did not contain the entire agreement between the parties and was only a partial written record of their arrangement.
- Matthews offered parol testimony that Drew’s representatives had orally promised he would not be discharged except for cause.
- After Matthews made a showing that the writing might be incomplete as a statement of the whole agreement, the district court allowed the jury to hear Matthews’s parol evidence and decide whether the memorandum was only partially integrated and whether a consistent oral “for-cause” term existed.
- The jury found for Matthews on wrongful discharge and awarded damages, but returned a verdict against him on his ADEA claim; Matthews did not appeal the ADEA verdict.
- Drew appealed to the Fifth Circuit, challenging (among other things) the admission of parol evidence and the resulting verdict.

## Issues

1. Whether the district court erred by admitting parol evidence that Drew promised to discharge Matthews only for cause, despite the memorandum’s provision allowing either party to terminate “at any time” upon notice.
2. Whether the “Memo of Employment Agreement” was a complete and exclusive statement of the parties’ agreement on termination (a full integration) or instead only a partial integration that could be supplemented by consistent oral terms.
3. Whether the evidence and the jury instructions supported the verdict finding an enforceable limitation that Matthews could be discharged only for cause.

## Decision

- The Fifth Circuit affirmed the district court’s judgment for Matthews on the wrongful-discharge claim.
- The court held the trial judge could receive parol testimony in the first instance to determine whether the writing was intended as the complete agreement.
- The court concluded the memorandum could reasonably be found to be only partially integrated, so the jury could consider evidence of a consistent additional oral term limiting discharge to “for cause.”
- The court upheld the jury’s ability to credit Matthews’s account of the parties’ understanding and found no basis to disturb the verdict on the wrongful-discharge claim.
- The adverse ADEA verdict remained in place because Matthews did not appeal it.

## Legal Principles

- A court may consider surrounding circumstances, including parol evidence, to decide whether a writing was intended as the complete and exclusive statement of the parties’ agreement.
- When a writing is only partially integrated, parol evidence may be admitted to prove consistent additional terms that supplement (rather than change) the writing.
- Whether an additional oral term is consistent with a written term, and whether the writing was intended as complete, can be questions for the factfinder when supported by evidence.
- A termination-on-notice clause stating employment “may be terminated at any time” does not necessarily foreclose proof of an added oral limitation (such as discharge only for cause) if the writing is found not to state the entire agreement and the oral term can be treated as a limitation on the employer’s exercise of the written power rather than a direct conflict.
- In a diversity case, the federal court applies the forum state’s contract and parol-evidence rules, while using federal procedural standards for trial management and review.

## Conclusion

Matthews v. Drew Chemical Corp. holds that a trial court may admit parol evidence to test whether an employment memorandum is a complete agreement, and, if the writing may be only a partial integration, the jury may consider consistent oral promises—such as a “for-cause only” discharge commitment—despite a written clause allowing termination “at any time” upon notice.


Matthews v. Drew Chemical Corp., 475 F.2d 146 (1973)