integration clause in Michigan

2025An integration clause “nullifies all antecedent agreements,” Archambo v Lawyers Title Ins Corp, 466 Mich 402, 413 ; 646 NW2d 170 (2002) (quotation marks and citation omitted), which is relevant when the two agreements cover the same subject and include inconsistent terms, see CMI Int’l Inc v Intermet Int’l Corp, 251 Mich App 125, 130 ; 649 NW2d 808 (2002).

2025An integration clause “nullifies all antecedent agreements,” Archambo v Lawyers Title Ins Corp, 466 Mich 402, 413 ; 646 NW2d 170 (2002) (quotation marks and citation omitted), which is relevant when the two agreements cover the same subject and include inconsistent terms, see CMI Int’l Inc v Intermet Int’l Corp, 251 Mich App 125, 130 ; 649 NW2d 808 (2002).

2019See Hamade v Sunoco Inc (R & M), 271 Mich App 145, 169 ; -6- 721 NW2d 233 (2006) (“Where the parties have included an express integration or merger clause within the agreement, it is conclusive and parol evidence is not admissible to show that the agreement is not integrated except in cases of fraud that invalidate the integration clause or where an agreement is obviously incomplete on its face and, therefore, parol evidence is necessary for the filling of gaps.”) (quotation marks and citations omitted).

2017When an agreement includes an integration clause, like that included in the Operating Agreement, “it is conclusive and parol evidence is not admissible to show that the agreement is not integrated except in cases of fraud that invalidate the integration clause or where an agreement is obviously incomplete ‘on its face’ and, therefore, parol evidence is necessary for the ‘filling of gaps.’ ” Hamade v Sunoco Inc (R & M), 271 Mich App 145, 169 ; 721 NW2d 233 (2006) (citations and quotation marks omitted).

2025An integration clause “nullifies all antecedent agreements,” Archambo v Lawyers Title Ins Corp, 466 Mich 402, 413 ; 646 NW2d 170 (2002) (quotation marks and citation omitted), which is relevant when the two agreements cover the same subject and include inconsistent terms, see CMI Int’l Inc v Intermet Int’l Corp, 251 Mich App 125, 130 ; 649 NW2d 808 (2002).

2025An integration clause “nullifies all antecedent agreements,” Archambo v Lawyers Title Ins Corp, 466 Mich 402, 413 ; 646 NW2d 170 (2002) (quotation marks and citation omitted), which is relevant when the two agreements cover the same subject and include inconsistent terms, see CMI Int’l Inc v Intermet Int’l Corp, 251 Mich App 125, 130 ; 649 NW2d 808 (2002).

1998In Ditzik v Schaffer Lumber Co, 139 Mich App 81, 88-89 ; 360 NW2d 876 (1984), this Court held that the trial court erroneously admitted extrinsic evidence of a course of conduct because it contradicted “the unambiguous language and body of the fully integrated agreement” and specifically noted that the written agreement included an integration clause.

1998In Ditzik v Schaffer Lumber Co, 139 Mich App 81, 88-89 ; 360 NW2d 876 (1984), this Court held that the trial court erroneously admitted extrinsic evidence of a course of conduct because it contradicted “the unambiguous language and body of the fully integrated agreement” and specifically noted that the written agreement included an integration clause.

2025As relevant in this case, a mutual mistake of fact means “an erroneous belief, which is shared and relied on by both parties, about a material fact that affects the substance of the transaction.” Ford Motor Co v City of Woodhaven, 475 Mich 425, 442 ; 716 NW2d 247 (2006). 3 Goodman also asserts that the fraud claim is barred by the purchase agreement’s integration clause and its “as is” clause.

2025As relevant in this case, a mutual mistake of fact means “an erroneous belief, which is shared and relied on by both parties, about a material fact that affects the substance of the transaction.” Ford Motor Co v City of Woodhaven, 475 Mich 425, 442 ; 716 NW2d 247 (2006). 3 Goodman also asserts that the fraud claim is barred by the purchase agreement’s integration clause and its “as is” clause.

2024Able Demolition, Inc v Pontiac, 275 Mich App 577 , 586 n 4; 739 NW2d 696 (2007).

2024Able Demolition, Inc v Pontiac, 275 Mich App 577 , 586 n 4; 739 NW2d 696 (2007).

2016Likewise, the valid integration clause renders reliance on the representation unreasonable as a matter of law. [Hamade, 271 Mich App at 170-171 .] -7- In contrast to Hamade, in Custom Data v Preferred Capital, 274 Mich App 239 , 733 NW2d 102 (2006), this Court rejected the defendant’s argument that an integration clause barred the plaintiff from introducing evidence to prove fraud.

2016Likewise, the valid integration clause renders reliance on the representation unreasonable as a matter of law. [Hamade, 271 Mich App at 170-171 .] -7- In contrast to Hamade, in Custom Data v Preferred Capital, 274 Mich App 239 , 733 NW2d 102 (2006), this Court rejected the defendant’s argument that an integration clause barred the plaintiff from introducing evidence to prove fraud.

2015However, in the context of an integration clause, which releases all antecedent claims, only certain types of fraud would vitiate the contract.” UAW-GM, 228 Mich App at 503 (citations omitted). “[W]hen a contract contains a valid merger clause, the only fraud that could vitiate the contract is fraud that would invalidate the merger clause itself, i.e., fraud relating to the merger clause or fraud that invalidates the entire contract including the merger clause.” Id. “ ‘There is an important distinction between (a) representations of fact made by one party to another to induce that party to ent

2015The Bosgraafs contend that the 2005 Mortgage is part of the 2005 Agreement, and thus, by replacing the 2005 Agreement, the parties also intended to extinguish the 2005 Mortgage. 19 In re Smith Trust, 274 Mich App 283, 285 ; 731 NW2d 810 (2007), citing Quality Prods & Concepts Co v Nagel Precision, Inc, 469 Mich 362, 375 ; 666 NW2d 251 (2003). 20 Id. 21 Id. 22 Id. -7- While it was executed as part of the same overall transaction, the 2005 Mortgage is a separate agreement between the parties, one not mentioned in the clauses cited by the Bosgraafs.

2015The Bosgraafs contend that the 2005 Mortgage is part of the 2005 Agreement, and thus, by replacing the 2005 Agreement, the parties also intended to extinguish the 2005 Mortgage. 19 In re Smith Trust, 274 Mich App 283, 285 ; 731 NW2d 810 (2007), citing Quality Prods & Concepts Co v Nagel Precision, Inc, 469 Mich 362, 375 ; 666 NW2d 251 (2003). 20 Id. 21 Id. 22 Id. -7- While it was executed as part of the same overall transaction, the 2005 Mortgage is a separate agreement between the parties, one not mentioned in the clauses cited by the Bosgraafs.

2015The Bosgraafs contend that the 2005 Mortgage is part of the 2005 Agreement, and thus, by replacing the 2005 Agreement, the parties also intended to extinguish the 2005 Mortgage. 19 In re Smith Trust, 274 Mich App 283, 285 ; 731 NW2d 810 (2007), citing Quality Prods & Concepts Co v Nagel Precision, Inc, 469 Mich 362, 375 ; 666 NW2d 251 (2003). 20 Id. 21 Id. 22 Id. -7- While it was executed as part of the same overall transaction, the 2005 Mortgage is a separate agreement between the parties, one not mentioned in the clauses cited by the Bosgraafs.

2015The Bosgraafs contend that the 2005 Mortgage is part of the 2005 Agreement, and thus, by replacing the 2005 Agreement, the parties also intended to extinguish the 2005 Mortgage. 19 In re Smith Trust, 274 Mich App 283, 285 ; 731 NW2d 810 (2007), citing Quality Prods & Concepts Co v Nagel Precision, Inc, 469 Mich 362, 375 ; 666 NW2d 251 (2003). 20 Id. 21 Id. 22 Id. -7- While it was executed as part of the same overall transaction, the 2005 Mortgage is a separate agreement between the parties, one not mentioned in the clauses cited by the Bosgraafs.

2004LEGAL CONTEXT AND THE KEELEY DECISIONS It is undisputed, that an insurer is liable to its insured for a judgment exceeding policy limits when the insurer, who has exclusive control of defending and settling the suit, refuses to settle within policy limits in “bad faith.” [Commercial Union Ins Co v Medical Protective Co, 426 Mich 109, 116 ; 393 NW2d 479 (1986), citing City of Wakefield v Globe Indemnity Co, 246 Mich 645, 648 ; 225 NW 643 (1929).] If it is determined that the insurer acted in bad faith, the question turns to the measure of the insured’s damages.

2004LEGAL CONTEXT AND THE KEELEY DECISIONS It is undisputed, that an insurer is liable to its insured for a judgment exceeding policy limits when the insurer, who has exclusive control of defending and settling the suit, refuses to settle within policy limits in “bad faith.” [Commercial Union Ins Co v Medical Protective Co, 426 Mich 109, 116 ; 393 NW2d 479 (1986), citing City of Wakefield v Globe Indemnity Co, 246 Mich 645, 648 ; 225 NW 643 (1929).] If it is determined that the insurer acted in bad faith, the question turns to the measure of the insured’s damages.

2004LEGAL CONTEXT AND THE KEELEY DECISIONS It is undisputed, that an insurer is liable to its insured for a judgment exceeding policy limits when the insurer, who has exclusive control of defending and settling the suit, refuses to settle within policy limits in “bad faith.” [Commercial Union Ins Co v Medical Protective Co, 426 Mich 109, 116 ; 393 NW2d 479 (1986), citing City of Wakefield v Globe Indemnity Co, 246 Mich 645, 648 ; 225 NW 643 (1929).] If it is determined that the insurer acted in bad faith, the question turns to the measure of the insured’s damages.

2004LEGAL CONTEXT AND THE KEELEY DECISIONS It is undisputed, that an insurer is liable to its insured for a judgment exceeding policy limits when the insurer, who has exclusive control of defending and settling the suit, refuses to settle within policy limits in “bad faith.” [Commercial Union Ins Co v Medical Protective Co, 426 Mich 109, 116 ; 393 NW2d 479 (1986), citing City of Wakefield v Globe Indemnity Co, 246 Mich 645, 648 ; 225 NW 643 (1929).] If it is determined that the insurer acted in bad faith, the question turns to the measure of the insured’s damages.

1999For example, the Supreme Court of Colorado in Neves, supra at 1054 , stated that “ [t]his exception to the parol evidence rule accurately reflects Colorado’s unsympathetic position toward parties who seek to take gratuitous advantage of an agreement when they are not parties to the agreement.” 5 Similarly, in rejecting the defendant’s argument that the integration clause in the release required a holding in his favor, the Oregon Court of Appeals stated, “We see no possible relevance that that provision, agreed to by the parties to the release, can have on whether parol evidence is admissible t

1999For example, the Supreme Court of Colorado in Neves, supra at 1054 , stated that “ [t]his exception to the parol evidence rule accurately reflects Colorado’s unsympathetic position toward parties who seek to take gratuitous advantage of an agreement when they are not parties to the agreement.” 5 Similarly, in rejecting the defendant’s argument that the integration clause in the release required a holding in his favor, the Oregon Court of Appeals stated, “We see no possible relevance that that provision, agreed to by the parties to the release, can have on whether parol evidence is admissible t

1999For example, the Supreme Court of Colorado in Neves, supra at 1054 , stated that “ [t]his exception to the parol evidence rule accurately reflects Colorado’s unsympathetic position toward parties who seek to take gratuitous advantage of an agreement when they are not parties to the agreement.” 5 Similarly, in rejecting the defendant’s argument that the integration clause in the release required a holding in his favor, the Oregon Court of Appeals stated, “We see no possible relevance that that provision, agreed to by the parties to the release, can have on whether parol evidence is admissible t

1999For example, the Supreme Court of Colorado in Neves, supra at 1054 , stated that "[t]his exception to the parol evidence rule accurately reflects Colorado's unsympathetic position toward parties who seek to take gratuitous advantage of an agreement when they are not parties to the agreement." [5] Similarly, in rejecting the defendant's argument that the integration clause in the release required a holding in his favor, the Oregon Court of Appeals stated, "We see no possible relevance that that provision, agreed to by the parties to the release, can have on whether parol evidence is admissible

1999Indeed, this Court, too, has stated that it agrees with “the majority of courts which hold that the parol evidence rule cannot be invoked either by or against a stranger to the contract.” Denha v Jacob, 179 Mich App 545, 550 ; 446 NW2d 303 (1989), citing 30 Am Jur 2d, Evidence, § 1031, pp 166-167.

1999Indeed, this Court, too, has stated that it agrees with “the majority of courts which hold that the parol evidence rule cannot be invoked either by or against a stranger to the contract.” Denha v Jacob, 179 Mich App 545, 550 ; 446 NW2d 303 (1989), citing 30 Am Jur 2d, Evidence, § 1031, pp 166-167.

1998The parties' choice to include such an internal rule of construction precludes consideration of any prior or contemporaneous agreements and compels summary disposition here for defendants. [15] The previous paragraph of the letter of agreement requires an advance deposit of "$73,260.00 which is an estimated 50% of the total bill." Whether this estimate is fifty percent of the total bill for rooms or the total bill for rooms, food, and beverage is a factual issue that must be resolved on remand. [16] Further, to contend that a personal service element was introduced into consideration by the al

1998The parties' choice to include such an internal rule of construction precludes consideration of any prior or contemporaneous agreements and compels summary disposition here for defendants. [15] The previous paragraph of the letter of agreement requires an advance deposit of "$73,260.00 which is an estimated 50% of the total bill." Whether this estimate is fifty percent of the total bill for rooms or the total bill for rooms, food, and beverage is a factual issue that must be resolved on remand. [16] Further, to contend that a personal service element was introduced into consideration by the al

1998We are aware of two Michigan decisions suggesting that parol evidence may, under some circumstances, be admissible to vary the terms of a written agreement despite the existence of an integration clause, Central Transport, Inc v Fruehauf Corp, 139 Mich App 536 ; 362 NW2d 823 (1984), and Van Pembrook v Zero Mfg Co, 146 Mich App 87, 98 ; 380 NW2d 60 (1985).

1998We are aware of two Michigan decisions suggesting that parol evidence may, under some circumstances, be admissible to vary the terms of a written agreement despite the existence of an integration clause, Central Transport, Inc v Fruehauf Corp, 139 Mich App 536 ; 362 NW2d 823 (1984), and Van Pembrook v Zero Mfg Co, 146 Mich App 87, 98 ; 380 NW2d 60 (1985).

1998We find little Michigan authority discussing the parol evidence rule in the context of contracts that include integration clauses. 6 In McCray Refrigerator & Cold Storage Co v Woods & Zent, 99 Mich 269, 271-272 ; 58 NW 320 (1894), the Court stated that where a written agreement (that included an integration clause) was silent regarding the subject of warranty, a warranty could not be proved by parol evidence.

1998We find little Michigan authority discussing the parol evidence rule in the context of contracts that include integration clauses. 6 In McCray Refrigerator & Cold Storage Co v Woods & Zent, 99 Mich 269, 271-272 ; 58 NW 320 (1894), the Court stated that where a written agreement (that included an integration clause) was silent regarding the subject of warranty, a warranty could not be proved by parol evidence.

1998The conclusion that parol evidence is not admissible to show that a written agreement is not integrated when the agreement itself includes an integration clause is consistent with the general contract principles of honoring parties’ agreements as expressed in. their written contracts and not creating ambiguities where none exist. 4 See Rasheed, supra at 127, n 28 ; Sheldon-Seatz, supra at 406-407 ; Smith, supra at 759 .

1998The conclusion that parol evidence is not admissible to show that a written agreement is not integrated when the agreement itself includes an integration clause is consistent with the general contract principles of honoring parties' agreements as expressed in their written contracts and not creating ambiguities where none exist. [4] See Rasheed, supra at 127, n. 28 , 517 N.W.2d 19 ; Sheldon-Seatz, supra at 406-407 , 29 N.W.2d 832 ; Smith, supra at 759 , 514 N.W.2d 150 .

1998See Brady v Central Excavators, Inc, 316 Mich 594 ; 25 NW2d 630 (1947); In re Frost, 130 Mich App 556 , 562, n 1; 344 NW2d 331 (1983) (parol evidence admissible where it was clear from the face of the writing that the writing did not contain the complete agreement as assented to by the parties); Franklin v White, 493 NE2d 161, 166 (Ind, 1986) (“An integration clause is only some evidence of the parties’ intentions.

1998See Brady v Central Excavators, Inc, 316 Mich 594 ; 25 NW2d 630 (1947); In re Frost, 130 Mich App 556 , 562, n 1; 344 NW2d 331 (1983) (parol evidence admissible where it was clear from the face of the writing that the writing did not contain the complete agreement as assented to by the parties); Franklin v White, 493 NE2d 161, 166 (Ind, 1986) (“An integration clause is only some evidence of the parties’ intentions.

1998We are aware of two Michigan decisions suggesting that parol evidence may, under some circumstances, be admissible to vary the terms of a written agreement despite the existence of an integration clause, Central Transport, Inc v Fruehauf Corp, 139 Mich App 536 ; 362 NW2d 823 (1984), and Van Pembrook v Zero Mfg Co, 146 Mich App 87, 98 ; 380 NW2d 60 (1985).

1998We are aware of two Michigan decisions suggesting that parol evidence may, under some circumstances, be admissible to vary the terms of a written agreement despite the existence of an integration clause, Central Transport, Inc v Fruehauf Corp, 139 Mich App 536 ; 362 NW2d 823 (1984), and Van Pembrook v Zero Mfg Co, 146 Mich App 87, 98 ; 380 NW2d 60 (1985).