## Facts

- Sellers agreed to sell a restaurant business to purchasers under a written agreement conditioned on purchasers obtaining an acceptable three-year lease of the premises.
- At the scheduled closing, purchasers had not secured a lease, but sellers wanted the transaction to close.
- Purchasers alleged sellers orally promised that if purchasers closed and later could not obtain a lease, sellers would release purchasers from the deal and return the $15,000 down payment.
- Relying on that promise, purchasers signed the closing documents, paid $15,000, and executed a $45,000 promissory note to sellers.
- Purchasers never obtained an acceptable lease, stopped paying on the note, and sellers sued to enforce the note.
- Purchasers defended on the ground that their lease failure triggered the oral condition, discharging their obligations and requiring return of the down payment.

## Issues

1. Whether the parol evidence rule barred evidence of an oral promise that the written sale contract and promissory note would be ineffective (or would be discharged with a refund) if purchasers failed to obtain an acceptable lease.
2. Whether the alleged oral promise was a permissible condition precedent to the effectiveness or performance of the written instruments, rather than an impermissible contradiction of an integrated writing.

## Decision

- The Court of Appeals reversed the judgment for sellers and remanded.
- The court held the trial court erred by excluding evidence of the alleged oral condition under the parol evidence rule.
- The court concluded the oral promise, if proved, related to a condition affecting whether the written obligations became operative, and therefore could be considered in determining liability on the note.

## Legal Principles

- Parol evidence may be admitted to show that a written agreement was subject to a condition precedent to its effectiveness or to a party’s duty to perform.
- The parol evidence rule bars prior or contemporaneous oral terms that contradict an integrated writing, but it does not necessarily bar proof of a collateral condition that the parties intended to control whether the writing would operate.
- In determining contractual intent, courts may consider the circumstances surrounding the transaction and related understandings offered to establish the parties’ intent as to when contractual obligations arise.

## Conclusion

The appellate court held that evidence of an alleged oral condition tied to obtaining a lease was not barred by the parol evidence rule because it bore on whether the written sale documents and promissory note were intended to become binding absent satisfaction of that condition, and it remanded for proceedings allowing that evidence to be considered.


Scott v. Wall, 55 Wash. App. 404, 777 P.2d 581 (Wash. Ct. App. 1989)