When you’re doing business, you’re probably going to run into a lot of agreements. These are what we call commercial transactions. Making sure these deals are solid is super important, so you don’t end up with problems down the road. This article breaks down the basics of how these transactions work, what makes them legal, and what happens if things go wrong. It’s all about understanding the rules so your business can run smoothly.
Key Takeaways
- Commercial transactions are the backbone of business, involving legally binding agreements like contracts.
- For a contract to be valid, it needs clear elements: an offer, acceptance of that offer, consideration (something of value exchanged), and mutual agreement.
- Parties involved in commercial transactions must have the legal capacity to contract, and the purpose of the agreement must be lawful.
- When agreements are broken, there are different ways to fix it, including monetary damages or specific actions to fulfill the contract.
- Disputes in commercial transactions can often be resolved outside of court through methods like mediation or arbitration.
Foundations Of Commercial Transactions
Commercial transactions form the backbone of our economy. They’re essentially agreements where parties exchange goods, services, or property for something of value. Understanding the basics of these deals is pretty important if you’re involved in business, big or small. It’s not just about shaking hands; there are legal principles at play that make sure everyone knows where they stand.
Definition Of A Contract
A contract is a formal agreement that the law will enforce. It’s more than just a promise; it’s a promise that creates obligations between two or more people or entities. If one party doesn’t do what they agreed to, the other party can usually ask a court to step in. This legal backing is what separates a casual agreement from a binding contract. Think of it as a safety net for business dealings.
Purpose Of Contract Law
So, why do we even have contract law? Well, its main job is to make sure that when people make promises in a business context, those promises are kept. It brings predictability to the marketplace. People can enter into agreements knowing that there are rules and consequences if those rules are broken. This helps build trust and encourages economic activity. It’s all about creating a reliable environment for exchanges. Contract law governs legally binding agreements; disputes arise from breaches, with remedies including performance or monetary damages.
Contract Law Overview
At its core, contract law deals with the creation, interpretation, and enforcement of agreements. It sets out the requirements for a valid contract and what happens when those requirements aren’t met. This field of law helps sort out disagreements and ensures that parties receive what they are owed. It’s a pretty big area, covering everything from simple sales to complex business partnerships. The goal is to provide a clear framework for commercial interactions, making sure that promises made are promises kept, or at least that there’s a way to address when they aren’t.
The legal system provides mechanisms to ensure that agreements are honored. When parties enter into a commercial transaction, they do so with the expectation that the terms will be fulfilled. Contract law provides the structure and remedies to uphold these expectations, promoting fairness and stability in business dealings.
Elements Of A Valid Commercial Agreement
So, you’re looking to make a deal, huh? Whether it’s a handshake or a thick stack of papers, for that agreement to actually mean something legally, it needs a few key ingredients. Think of it like baking a cake – leave out the flour, and it’s just not going to turn out right. In the world of business, these ingredients are pretty specific.
Offer
First off, someone has to propose something. This is the offer. It’s not just a casual "Hey, wanna buy my widget?" It needs to be clear, definite, and show that the person making the offer is serious about entering into a deal if the other side agrees. They’ve got to spell out what they’re offering and on what terms. It’s like saying, "I will sell you this specific widget for $100, delivered by Friday." That’s an offer.
Acceptance
Once an offer is on the table, the other party has to say "yes" to it. But it’s not just any "yes." The acceptance has to be clear and match the offer exactly. If you try to change the terms, like saying, "I’ll take the widget for $90," that’s not an acceptance; it’s a counter-offer, and the ball is back in the first person’s court. The acceptance needs to be communicated back to the person who made the offer, too. Silence usually doesn’t count as acceptance, unless there’s a prior agreement or a history of dealing that suggests otherwise.
Consideration
This is where things can get a little tricky, but it’s super important. Consideration is basically what each party gives up or promises to give up in exchange for the other party’s promise or action. It’s the "what’s in it for me?" part of the deal. It has to be something of value, but it doesn’t have to be equal. For example, you might sell a valuable piece of equipment for a very small amount of money if that’s what you both agree on. It’s the bargained-for exchange that makes the agreement binding. A one-sided promise, like "I’ll give you my car next week," without anything in return, usually isn’t a contract.
Mutual Assent
This one is often called a "meeting of the minds." It means both parties understand and agree to the basic terms of the deal. They’re on the same page about what the contract is actually about. If one person thinks they’re buying a car and the other thinks they’re selling a toy car, there’s no mutual assent, and therefore, no valid contract. It’s about genuine agreement on the core aspects of the transaction.
Here’s a quick rundown of what we’ve covered:
- Offer: A clear proposal with specific terms.
- Acceptance: An unqualified agreement to the offer’s terms.
- Consideration: Something of value exchanged by each party.
- Mutual Assent: Both parties understand and agree to the deal.
Without these four elements, what you have might be a nice conversation or a hopeful understanding, but it’s probably not a legally enforceable contract. And in business, that’s a big problem.
Capacity And Legality In Transactions
When two parties decide to enter into a business agreement, it’s not just about shaking hands and agreeing on terms. The law looks at a few other things to make sure the deal is actually going to stick. We’re talking about whether the people involved are legally able to make such a commitment and if what they’re agreeing to is even allowed.
Capacity To Contract
First off, can the people involved actually sign on the dotted line? This is about legal capacity. Generally, adults of sound mind are presumed to have this capacity. However, there are situations where capacity might be limited. Think about minors – they’re usually not allowed to enter into contracts that bind them long-term, though there are exceptions for necessities. Then there are individuals who might be mentally incapacitated, perhaps due to illness or a severe disability, or even someone who is so intoxicated they can’t understand the nature of the agreement they’re making. If a party lacks the necessary capacity, the contract might be voidable, meaning the person without capacity can choose to get out of it. This is a safeguard to prevent exploitation.
Legal Purpose
Beyond who is signing, what are they agreeing to? The purpose of the contract must be legal. You can’t have a binding agreement to do something that’s against the law, like selling illegal substances or engaging in fraud. If the core purpose of the contract is illegal, the agreement is void from the start. It’s like trying to build a house on quicksand; it’s just not going to hold up.
Defective Contracts
Sometimes, even if the parties seem capable and the purpose appears legal on the surface, something can go wrong in the formation of the agreement. This can lead to what we call defective contracts. These might be:
- Void Contracts: These are invalid from the very beginning. They never had any legal effect. An example would be a contract for a crime.
- Voidable Contracts: As mentioned with capacity, these contracts can be canceled by one of the parties. This often happens if there was fraud, duress (being forced into the agreement), or a significant mistake about the terms or subject matter.
- Unenforceable Contracts: These might be valid in substance but can’t be enforced by a court. A common reason for this is failing to meet the requirements of the Statute of Frauds, which requires certain types of contracts (like those involving real estate) to be in writing.
Understanding these elements is key to ensuring your business agreements are solid and stand up when you need them to. It’s not just about the deal itself, but the legal foundation it’s built upon. Making sure everyone involved has the right to contract and that the subject matter is lawful prevents a lot of headaches down the road.
Types Of Commercial Contracts
Commercial transactions rely on agreements, and understanding the different kinds of contracts is pretty important. They aren’t all the same, and knowing the distinctions can save a lot of headaches down the road. Basically, contracts can be categorized in a few key ways, mostly based on how they’re formed and the nature of the promises exchanged.
Express Contracts
These are the most straightforward. An express contract is one where the terms are clearly stated, either in writing or verbally. Think of a lease agreement you sign, or a verbal agreement to buy a specific piece of equipment. The intent of the parties is explicitly laid out. It’s all out in the open, leaving little room for guesswork about what each party is supposed to do.
Implied Contracts
Implied contracts are a bit more subtle. They aren’t formed by explicit words, but rather by the actions or conduct of the parties involved. For example, if you go to a doctor, you implicitly agree to pay for their services, even if you never signed a formal document. The law infers a contract based on the circumstances and the reasonable expectations of the people involved. It’s about what people do, not just what they say.
Bilateral Contracts
Most commercial agreements fall into this category. A bilateral contract involves a mutual exchange of promises. Party A promises to do something, and Party B promises to do something in return. It’s a two-way street. For instance, a supplier agrees to deliver goods by a certain date, and the buyer agrees to pay a specific price upon delivery. Both sides are bound by their promises from the moment the contract is formed.
Unilateral Contracts
Unilateral contracts are a bit different. Here, one party makes a promise in exchange for the performance of an act by the other party. The contract isn’t formed until the act is completed. A common example is a reward offer: "I’ll pay $100 to anyone who finds my lost dog." The promise is only binding once someone actually finds and returns the dog. It’s a one-sided promise that becomes enforceable upon completion of a specific action, not just a return promise. This type of agreement is less common in day-to-day business dealings but can be found in specific situations like contests or certain incentive programs. You can find more details on contract formation in general contract law.
Here’s a quick look at the differences:
| Contract Type | Formation Method |
|---|---|
| Express Contract | Stated terms (written or oral) |
| Implied Contract | Inferred from conduct or circumstances |
| Bilateral Contract | Exchange of promises |
| Unilateral Contract | Promise for an act (performance) |
Understanding these distinctions is key because it affects how a contract is interpreted and enforced. The way an agreement is formed dictates when obligations arise and what constitutes a breach.
Enforceability And Interpretation Of Agreements
So, you’ve got this agreement, right? It looks good on paper, maybe even sounds good when you talk it over. But what actually makes it stick? That’s where enforceability and interpretation come into play. It’s not just about shaking hands; it’s about making sure that what you agreed to can actually be held up if things go sideways.
Statute Of Frauds
This one’s a bit of a gatekeeper. The Statute of Frauds basically says that some contracts have to be in writing to be legally binding. It’s not some ancient, dusty rule; it’s still very much alive and kicking. Think about buying land, or agreements that are supposed to last for more than a year. If you don’t have it in writing, a court might just say, "Sorry, can’t help you here." It’s all about preventing fraud and making sure big deals have some solid proof.
Here are some common types of contracts that usually need to be in writing:
- Contracts for the sale of land or real estate.
- Agreements that, by their terms, cannot be performed within one year from the date they are made.
- Contracts where a person agrees to pay the debt of another (suretyship).
- Agreements made in consideration of marriage (like prenuptial agreements).
- Contracts for the sale of goods above a certain value (this can vary by jurisdiction).
Parol Evidence Rule
Okay, so you have a written contract. Great. Now, what if one of you says, "Well, before we signed, you promised X, Y, and Z, and that’s not in the contract!" The Parol Evidence Rule generally stops you from using those outside conversations or agreements to change or contradict what’s written in the final, signed document. The written agreement is usually considered the final word. It’s meant to give certainty to written deals. Of course, there are exceptions, like if there was fraud, a mistake, or if the written contract wasn’t intended to be the complete agreement, but generally, stick to what’s in the ink.
Interpretation Of Contracts
When parties disagree on what a contract actually means, courts have to step in and figure it out. They don’t just guess. They look at the plain language of the contract first. If that’s clear, great. If not, they might look at the context, the circumstances surrounding the agreement, and what the parties were trying to achieve. It’s like piecing together a puzzle to understand the original intent. Sometimes, they might even consider industry customs or prior dealings between the parties. The goal is to figure out what a reasonable person would understand the agreement to mean. It’s a pretty involved process, and honestly, it’s why getting clear language in your contracts from the start is so important. You don’t want to end up in a situation where you’re arguing over a comma. Understanding contract law can help prevent these issues.
Performance And Breach In Commercial Dealings
Once a contract is in place, the next logical step is performance. This is where parties actually do what they agreed to do. Think of it as fulfilling your end of the bargain. When everything goes according to plan, obligations are met, and the contract is discharged. It’s the ideal scenario, and what most commercial transactions aim for.
Performance
Performance means carrying out the duties outlined in the contract. It’s about meeting the agreed-upon terms, whether that’s delivering goods, providing services, or making payments. The goal is to satisfy the contract’s requirements. Sometimes, performance can be tricky. What if the quality isn’t quite what was expected, or the delivery is a day late? These situations can lead to disputes, even if the party technically performed.
Breach Of Contract
A breach of contract happens when one party doesn’t do what they promised. It’s a failure to perform contractual obligations. This can range from a minor slip-up to a complete failure to act. The consequences of a breach depend heavily on its nature and impact.
Material Breach
A material breach is a big deal. It’s a failure to perform that’s so significant it defeats the whole purpose of the contract. Imagine ordering custom-made machinery for your factory, and what arrives is completely different and unusable. That’s likely a material breach. It goes to the heart of the agreement, and the non-breaching party usually has strong grounds for seeking remedies. This type of breach often excuses the non-breaching party from their own performance obligations.
Anticipatory Breach
Sometimes, you get a heads-up that a breach is coming. This is called anticipatory breach, or anticipatory repudiation. It occurs when one party clearly indicates, before the performance is even due, that they won’t be able to or won’t intend to fulfill their contractual duties. For example, if a supplier tells you they can’t possibly deliver the goods you ordered by the agreed date, even though that date is still weeks away, that’s anticipatory breach. This allows the other party to take action sooner, like finding a replacement supplier, rather than waiting for the actual due date to pass and then dealing with the fallout. It’s a way to manage risk and mitigate potential losses. Understanding these concepts is key to navigating commercial agreements.
Here’s a quick look at the types of breaches:
- Minor Breach: A slight deviation from the contract terms that doesn’t significantly impact the overall agreement. The contract is still substantially performed.
- Material Breach: A significant failure to perform that undermines the core purpose of the contract.
- Anticipatory Breach: A clear indication by one party, before performance is due, that they will not fulfill their obligations.
- Actual Breach: A failure to perform that occurs on or after the performance is due.
Remedies For Commercial Transaction Disputes
When a commercial contract goes sideways, and one party doesn’t hold up their end of the bargain, the law steps in to try and fix things. This is where remedies come into play. The main goal of these remedies is usually to put the wronged party in the position they would have been in if the contract had been fulfilled properly. It’s not about punishing the breaching party, but about making the injured party whole again, as much as possible.
There are several ways the law can try to achieve this, depending on the specifics of the situation and the type of contract. It’s a complex area, and understanding the options can be really helpful if you ever find yourself in a dispute. A good grasp of contract law overview can make a big difference.
Compensatory Damages
These are probably the most common type of remedy. Compensatory damages are meant to cover the direct losses a party suffers because of the breach. Think of it as making up for what was lost directly. For example, if you paid for goods that were never delivered, compensatory damages would aim to cover the cost of those goods.
Consequential Damages
These go a step further than compensatory damages. Consequential damages cover indirect losses that were a foreseeable result of the breach. For instance, if a supplier’s delay in delivering a key component caused a manufacturer to miss a major client’s deadline, the lost profits from that missed client could be considered consequential damages. The key here is foreseeability – these losses had to be reasonably predictable when the contract was made.
Liquidated Damages
Sometimes, contracts will include a clause specifying a set amount of money to be paid if a breach occurs. This is called liquidated damages. The idea is to pre-determine the damages to avoid the difficulty of calculating them later. However, these clauses are only enforceable if the amount is a reasonable estimate of potential losses and not just a penalty designed to punish the breaching party.
Specific Performance
In certain situations, money just isn’t enough. Specific performance is a remedy where a court orders the breaching party to actually perform their contractual obligation. This is usually reserved for cases where the subject matter of the contract is unique, like a piece of real estate or a rare collectible, and monetary damages wouldn’t adequately compensate the injured party.
Here’s a quick look at how these remedies might apply:
- Compensatory: Covers direct losses (e.g., cost of replacement goods).
- Consequential: Covers foreseeable indirect losses (e.g., lost profits due to delay).
- Liquidated: Pre-agreed amount in the contract, if reasonable.
- Specific Performance: Court order to fulfill the contract, used for unique items.
When a contract is breached, the legal system aims to restore the non-breaching party to the financial position they would have occupied had the agreement been honored. This restoration is achieved through various forms of legal and equitable relief, tailored to the specific circumstances of the dispute and the nature of the harm suffered.
Resolving Commercial Transaction Conflicts
When disagreements arise in commercial dealings, several avenues exist to find a resolution. It’s not always about heading straight to court. Often, parties can work through issues more efficiently and with less expense.
Alternative Dispute Resolution
Alternative Dispute Resolution, or ADR, offers methods outside of traditional litigation. These processes are designed to be more flexible and can often lead to quicker outcomes. Common ADR methods include:
- Mediation: A neutral third party helps facilitate a discussion between the disputing parties to reach a mutually agreeable solution. The mediator doesn’t make decisions but guides the conversation.
- Arbitration: Parties agree to present their case to an arbitrator or a panel of arbitrators who will make a binding decision. This is often faster than a trial and can be more private.
- Negotiation: Direct discussions between the parties involved, aiming to reach a settlement without the involvement of a third party.
These methods can save time and money compared to a full trial. Choosing the right ADR process often depends on the nature of the dispute and the parties’ willingness to compromise. Sometimes, a contract will even specify which ADR methods must be attempted before litigation can begin.
The goal of ADR is to provide a structured yet adaptable framework for resolving disagreements, often preserving business relationships where possible.
Settlements
Many commercial disputes find their end in a settlement agreement. This is a voluntary contract between the parties that resolves the dispute. It typically involves one party agreeing to pay a sum of money or take some other action in exchange for the other party dropping their claim. Settlements avoid the uncertainty and cost of a trial. They can be reached at any stage of a dispute, from before a lawsuit is filed to during the trial itself. A well-drafted settlement agreement is crucial for clarity and to prevent future disputes over the same matter. It’s often a good idea to have legal counsel review any proposed settlement.
Trial Process
If ADR and settlement negotiations fail, the dispute may proceed to trial. This is the formal court process where evidence is presented, witnesses testify, and a judge or jury makes a decision. The trial process involves several stages, including opening statements, presentation of evidence, closing arguments, and the verdict or judgment. It’s a more adversarial and time-consuming approach, but it provides a definitive resolution when parties cannot agree. The rules of evidence and civil procedure govern how a trial is conducted, aiming for a fair and orderly process. Understanding the civil procedure is key for anyone involved.
Summary Judgment
Summary judgment is a procedural tool that can resolve a case, or parts of it, without a full trial. It’s granted when the court finds that there is no genuine dispute over any material facts of the case, and one party is entitled to judgment as a matter of law. This means that even if all the facts presented are true, one side still wins based on the law. It’s a way to avoid the expense and time of a trial when the outcome is clear based on the undisputed facts. Parties can file motions for summary judgment, and the court will review the evidence to decide if a trial is necessary.
Property Aspects Of Commercial Transactions
When businesses engage in transactions, especially those involving significant assets, understanding property law is key. It’s not just about the exchange of goods or services; it often involves the transfer or use of real estate or other valuable assets. This section breaks down some core concepts related to property in commercial dealings.
Title
Title refers to the legal right of ownership of property. In commercial transactions, verifying title is a critical step. It confirms that the seller or transferor actually has the legal authority to convey ownership. A clear title means there are no outstanding claims or encumbrances that could affect the buyer’s ownership rights. This is especially important when dealing with real estate, where a thorough title search is standard practice. For other valuable assets, like equipment or intellectual property, ensuring proper documentation of ownership transfer is just as vital.
Deeds
When real property changes hands, a deed is the legal document that formally transfers ownership. There are different types of deeds, each offering varying levels of protection to the buyer. A warranty deed, for instance, provides the highest level of assurance, with the seller guaranteeing clear title. A quitclaim deed, on the other hand, transfers whatever interest the seller has, without any guarantees about the title’s quality. Understanding the implications of the deed being used is essential for any commercial real estate transaction.
Encumbrances
An encumbrance is a claim or liability that rests on a property, potentially affecting its value or transferability. These can include things like liens (e.g., unpaid taxes or mortgages), easements (rights granted to others to use a portion of the property), or restrictive covenants that limit how the property can be used. Before entering into a commercial transaction, especially one involving real estate, it’s important to identify any existing encumbrances. This information is typically uncovered during a title search and can significantly impact the deal’s terms or even its feasibility. Identifying and addressing encumbrances is a fundamental part of due diligence.
Property Transfer
Transferring property in a commercial context can happen in several ways. The most common is through a sale, where ownership is exchanged for monetary consideration. However, property can also be transferred through gifts, inheritance, or other legal conveyances. The method of transfer dictates the documentation required and the legal implications for both parties. For instance, transferring ownership of personal property might involve a simple bill of sale, while real estate requires a deed. The process needs to be handled correctly to avoid future disputes. You can find more details on how property is transferred in general property law.
Legal Frameworks For Business Operations
Running a business involves more than just a good idea and some customers. There’s a whole structure of laws that keep things running smoothly, or at least, they’re supposed to. Think of these as the rules of the road for commerce. Without them, it would be pretty chaotic.
Business and Commercial Law
This is the big one, covering how businesses are formed, how they operate, and how they interact with others. It includes everything from setting up your company structure – like a sole proprietorship, partnership, or corporation – to the actual deals you make. Commercial law specifically deals with transactions, like selling goods or services, and financial arrangements. Understanding these foundational principles is key to avoiding legal trouble down the line. It’s all about making sure agreements are clear and enforceable, which is pretty important when money is involved. You can find more details on how these laws are structured and applied in various statutes and regulations.
Employment and Labor Law
If you have employees, this area is non-negotiable. It covers the relationship between employers and workers. This includes things like minimum wage, overtime, workplace safety, and preventing discrimination. Labor law also gets into the nitty-gritty of unions and collective bargaining. It’s a complex field, and getting it wrong can lead to some serious headaches, not to mention costly lawsuits. It’s about balancing the rights and responsibilities of both the business and its staff.
Landlord-Tenant Law
This applies if your business operates out of a rented space, or if you rent out property. It sets out the rules for leases, rent payments, property maintenance, and what happens when a lease ends or is broken. For businesses, this means understanding your rights and obligations as a tenant, and for property owners, it’s about managing your rental properties legally and effectively. It’s a specific area of law that deals with the use of real estate and the agreements surrounding it.
Wrapping Up Commercial Transactions
So, we’ve gone over a lot of ground when it comes to commercial deals. It’s clear that understanding the basics of contracts, property, and how disputes get sorted out is pretty important for anyone doing business. Whether you’re dealing with a simple sale or a more complex agreement, knowing the rules helps keep things fair and predictable. It’s not always easy, and sometimes you might need a hand from someone who knows the law well, but getting a handle on these concepts can save a lot of headaches down the road. Just remember that clear communication and following the established procedures are key to making sure your business dealings go smoothly.
Frequently Asked Questions
What makes a contract a real, working agreement?
For a contract to be legally binding, several key things need to be in place. You need a clear offer from one person and a clear acceptance from the other. Both sides must agree to give something of value, like money or a service. This is called consideration. Also, both parties need to understand what they’re agreeing to and be legally able to make that agreement, meaning they are adults and of sound mind. Lastly, the whole deal has to be for something legal.
What’s the difference between a written contract and a spoken one?
A written contract is exactly what it sounds like – all the terms are written down and signed. A spoken contract, or oral contract, is agreed upon by talking. While some spoken contracts are valid, many types of agreements, especially those involving big amounts of money or property, must be in writing to be legally enforceable. This is thanks to something called the Statute of Frauds. It’s always safer to have important agreements in writing.
What happens if someone doesn’t do what they promised in a contract?
When someone doesn’t follow through on their part of a contract, it’s called a breach of contract. If the failure to perform is a big deal and ruins the main point of the contract, it’s a ‘material breach.’ If it’s a smaller issue, it’s a ‘minor breach.’ The person who didn’t get what they were promised can then seek remedies, like getting paid for their losses or, in some cases, forcing the other person to do what they agreed to.
Can a contract be canceled if someone was tricked or forced into it?
Yes, if a contract was made because someone was tricked with false information (fraud), threatened (duress), or unfairly pressured (undue influence), it might be considered a ‘defective contract.’ These types of contracts can often be canceled or ‘voided’ by the person who was wronged. This means the contract is no longer valid, and the parties might be returned to their original positions before the agreement.
What does ‘consideration’ mean in a contract?
Consideration is a fundamental part of most contracts. It means that each person involved in the agreement must give something of value to the other. This ‘something of value’ doesn’t have to be money; it could be a promise, an action, or even refraining from doing something. It’s the price each party pays for the other’s promise or action, making the agreement a two-way street.
What is ‘mutual assent’ in a contract?
Mutual assent, often called a ‘meeting of the minds,’ means that both parties involved in a contract clearly understand and agree on the same essential terms of the deal. They are on the same page about what the contract is about and what each person is supposed to do. Without this shared understanding, there isn’t a valid contract.
What are the different ways to solve contract disagreements without going to court?
There are several ways to sort out contract problems without a full trial. ‘Alternative Dispute Resolution’ (ADR) is a common approach. This includes mediation, where a neutral person helps the parties talk and find a solution, and arbitration, where a neutral person makes a decision for them. Many cases are also settled through direct negotiation between the parties, often with lawyers involved.
What is the ‘Parol Evidence Rule’?
The Parol Evidence Rule basically says that if you have a written contract that seems complete, you generally can’t use outside evidence – like earlier conversations or promises that aren’t written down – to change or contradict the terms of that final written agreement. It’s meant to protect the integrity of written contracts and ensure that the final document is what truly matters.