THE “ONE CONTRACT” RULE –

WHAT IT ISAND HOW TO USE IT

BYEDWARD N. MCCONNELL

©2013

emcconnellplc@live.com

The “One Contract” Rule

Restatement (Second) of Contracts, § 202(2)

“A writing is interpreted as a whole, and all writings that

are part of the same transaction are interpreted

together”.

Policy Supporting the “One Contract” Rule

In multiple document/contract situations – a court must be able to either:

reconcile conflicting or ambiguous provisions

or interpret consistent terms which demonstrate

a pattern of conduct or

the intent of the parties.

The Analysis Breakdown

1. “Number of Documents/Multiple

Writings”

There must be: “two or more

documents/contracts” which are “essential” to the

overall transaction.

2. “Documents Executed at or Near the Same Time”

The “two or more” “essential”

documents/contracts to the overall transaction must have been “executed at or near

the same time…”

This factor depends on the factual circumstances.

3. “In The Course of the Same Transaction”

Focus on the Benefit to be Conferred.

If there are: two or more parties,

each contributes a certain benefit to the transaction, and if there are more than two contracts/documents which are essential to the transaction; it is probably

the same transaction.

4. “And Concerning The Same Subject Matter”

Do the writings relate to specific goods or services?

Are the goods or services a benefit to the transaction?

If “yes”, then it’s the same subject matter.

5. “Same Parties”

Key Factors:

There can be any number of Parties.

What is their relationship to transaction?

Are they conferring a benefit? If so, what and how?

6. “Express References”:If a written contract refers to another instrument and

makes the terms and conditions of such other

instrument a part of it, the two will be construed

together as the agreement of the parties.

“Essential” Document: Is it necessary to the

transaction? If yes, it’s essential.

What the “One Contract” Rule Will Not Do:

Written contracts terms cannot be changed.

Contract terms from one contract will not be imported

wholesale into another contract to alter the

original meaning.

Will not stop a bankruptcy but can be used despite one.

The ‘One Contract” Rule - Recap:

Not a silver bullet;

Not a death sentence; It’s a means to analyze situations

involving multiple document/contract transactions.

The rule allows a court to reconcile conflicts or identify consistencies to determine the

relationship the parties intended.

It can be an exception to the “parol evidence” rule.