In Carrow v. Arnold, (Del. Ch., Oct. 31, 2006), read opinion here, the Delaware Chancery Court denied a claim for rescission of an agreement for real estate. In the process, it addressed issues of parol evidence, the fraud exception to the parol evidence rule and the concept of integration clauses. It then granted summary judgment on a counterclaim for specific performance. In this 27-page opinion, these theories were applied after a careful discussion of detailed facts.
The facts of this case, at first blush, encourage sympathy. An older farmer sold his 200-plus acre farm to a somewhat aggressive developer, but the farmer failed to have his lawyer review it before he signed the agreement. The farmer argued that he was the victim of fraud and wanted to introduce oral statements of the developer in support of his argument. The court determined that neither the ambiguity nor the fraud exception to the inadmissibility of parol evidence applied here, especially as the alleged oral statements prior to the written agreement were inconsistent with the written agreement. The court noted that the absence of an integration clause is not determinative of this issue.
One Key Point of Case: The court reasoned that fraudulent inducement will not be allowed as a defense to a contract where, as here, a party had ample opportunity to review the agreement and identify the offending terms, but failed to change the very terms of the agreement on which the fraud claim is based. (Or, he should have refused to sign it.) That is, the complaining party should have refused to agree to the offending terms, and it was too late after the agreement was signed to claim fraud based simply on prior, allegedly inconsistent, oral statements of the other party.
My own commentary: Even though the hapless plaintiff here did not bother to hire a lawyer, nonetheless, in my view the court will not be inclined to serve as a refuge for people who make ill-conceived or plainly wrong decisions. This is especially true when the court deals with sophisticated parties, but we see in this case that it is also true where "average" adults are acting at arm’s length and one party in hindsight wishes things had been done differently. Some refer to the Chancery Court as the court to go to for situations that are just "not fair’ but one should not assume that every situation that is simply "not fair" will be "fixed" by the "magic wand" of the chancellor. Rather, any relief generally must be based on recognized equitable or legal principles.