Interpretation

Case: A. Kemp Fisheries, Inc. v. Castle & Cooke, Inc. (1988, 9th)

Facts: K btwn parties where Kemp (P) would charter a vessel for fishing from
Bumble (a subsidiary of D Castle). There were negotiations and the parties signed
a letter of intent that incorporated messages exchanged during their negotiations,
and Kemp also paid a nonrefundable deposit of $50k. Bumble then sent the final
agreement for Kemp to sign. Kemp noticed that certain provisions that were
discussed in the negotiations were missing (i.e., that the engines would be in
good working order and an oral representation that the freezer system would meet
Kemp's needs), and instead disclaimed all warranties, but P still signed it. When
the engines and freezer malfunctioned, Kemp suffered lost profits, and brought
this suit to recover those lost profits. Trial judge found that the agreement was
ambiguous, and admitted parole evidence (i.e., the letter of intent) to clarify
the parties' intent. Found for P. D appeals.

Issue: Whether the final agreement is integrated, or if too ambiguous and needs
parole evidence admitted.

Holding: Reversed trial court's judgment. D wins.

Reasoning: Court says it's integrated because the letter of intent specifically
says that the parties intended that the Charter would be the final documentation
of their agreement, and the Charter doesn’t mention the condition of the engine or
freezer, and instead disclaims all warranties. Also, warranties of vessel's
condition, engines and freezing system are not collateral agreements that you
would expect as a separate K. Also, court says Kemp had a lot of time to review
the final agreement before signing it, and Kemp's lawyer also reviewed it, so
they would have had a lot of opportunities to change it if that was necessary.
Nothing suggests that the final agreement wasn’t recognized by the parties as
final and complete.

Notes

• Trial court says its ambiguous, so he'll admit parole evidence to see what was
intended
• Judge Wright says its an integrated K.
○ As to the terms in the document, its not ambiguous, so no parole evidence
should be admitted
○ Parole evidence should be admitted only when the document's meaning is not
clear
• Point here: if they were to negotiate on every detail, it would take so long to
draft the K, they would miss the fishing season
○ But maybe something so central like the freezing system, is so important
they it should have been in the k
○ Transaction costs will increase, if stuff needs to be re-negotiated, it
may inhibit K formation
○ But also if we don’t take K at its face value, we undermine the value of a
K
• Notes: "plain meaning rule"
○ A familiar and eminently sensible proposition of law is that, when parties
set down their agreement in a clear, complete document, their writing should as a
rule be enforced according to its terms. Evidence outside the four corners of the
document as to what was really intended but unstated or misstated is generally
inadmissible to add to or vary the writing… That rule imparts 'stability to
commercial transactions by safeguarding against fraudulent claims, perjury, death
of witnesses … infirmity of memory … [and] the fear that the jury will improperly
evaluate the extrinsic evidence.' Such considerations are all the more compelling
in the context of real property transactions, where commercial certainty is a
paramount concern.