Sherrodd, Inc. v. Morrison-Knudsen Co. Case Brief Summary | Law Case Explained

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Sherrodd, Inc. v. Morrison-Knudsen Co. | 815 P.2d 1135 (1991)
The parol evidence rule vexes many law students and legal professionals. A substantive rule of contract law that sounds like a rule of evidence, its exceptions threaten to swallow it whole. But, from time to time, it bares its teeth, as the plaintiff learned to its chagrin in Sherrodd versus Morrison-Knudsen.
Sherrodd, a construction company, subcontracted with C O P Construction to perform earth-moving work as part of a larger project. C O P was a subcontractor to Morrison-Knudsen, the general contractor on the job. While Sherrodd’s representative examined the site in preparation for making a bid, a Morrison representative told him that there were twenty-five thousand cubic yards of excavation to be done. Sherrodd priced its bid accordingly.
Sherrodd’s bid was accepted, and Sherrodd started work before signing a written contract. On the job, Sherrodd learned that the quantity of earth to be moved was substantially more than Morrison had represented. The contract didn’t specify a precise quantity of earth to be moved, but the contract price was Sherrodd’s bid based on twenty-five thousand cubic yards. Sherrodd signed the contract anyway after C O P threatened to withhold payment for the work already done. C O P told Sherrodd that they’d work out a deal for Sherrodd to be paid more than the contract price later.
The contract Sherrodd signed stated that Sherrodd had examined the site and satisfied itself about the quantity of work to be done. It also specified that the contract contained all of the terms and conditions the parties agreed to, that no verbal agreements could modify the contract’s terms, and that any changes had to be in writing and signed by the parties.
After Morrison refused to pay more than the contract price for the job, Sherrodd sued Morrison and C O P, alleging fraud and breach of the covenant of good faith and fair dealing. Sherrodd sought to recover in quantum meruit and tort damages. Morrison moved for summary judgment, arguing that the parol evidence rule barred any evidence of alleged oral misrepresentations or agreements outside the contract. The trial court ruled for Morrison, and Sherrodd appealed to the Montana Supreme Court.
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