Parol Evidence Rule

Definition

The parol evidence rule is a legal principle that prohibits the use of evidence outside of the written contract to contradict or add to the terms of a written agreement. It aims to preserve the integrity and finality of a written contract by limiting the introduction of extrinsic evidence that could undermine the written terms.

5 Must Know Facts For Your Next Test

1. The parol evidence rule applies to integrated contracts, which are intended to be the complete and final expression of the parties' agreement.
2. The rule prohibits the introduction of extrinsic evidence to contradict or add to the terms of a written contract, unless the evidence falls under an exception to the rule.
3. Exceptions to the parol evidence rule include evidence of fraud, mistake, or ambiguity in the written contract, or evidence of a separate, collateral agreement.
4. The presence of a merger clause in a contract strengthens the application of the parol evidence rule by explicitly stating the written agreement is the complete and final expression of the parties' understanding.
5. The parol evidence rule is designed to promote the reliability and enforceability of written contracts by preventing parties from undermining the written terms through the introduction of extrinsic evidence.

Review Questions

• Explain the purpose and rationale behind the parol evidence rule.
  • The parol evidence rule serves to preserve the integrity and finality of written contracts by limiting the introduction of extrinsic evidence that could contradict or add to the terms of the written agreement. The rule is based on the principle that the written contract should be the complete and final expression of the parties' understanding, promoting the reliability and enforceability of these agreements. By excluding extrinsic evidence, the parol evidence rule helps to ensure that the written terms of the contract are not undermined, allowing the parties to rely on the finality of the written document.
• Describe the relationship between the parol evidence rule and the concept of an integrated contract.
  • The parol evidence rule applies specifically to integrated contracts, which are written agreements that are intended to be the complete and final expression of the parties' understanding. In an integrated contract, the parol evidence rule prohibits the introduction of extrinsic evidence, such as prior negotiations or agreements, to contradict or supplement the written terms. The presence of a merger clause, which explicitly states that the written contract is the complete agreement, further strengthens the application of the parol evidence rule by reinforcing the finality and exclusivity of the written document.
• Analyze the potential exceptions to the parol evidence rule and explain how they impact the rule's application.
  • While the parol evidence rule generally prohibits the introduction of extrinsic evidence to contradict or add to the terms of a written contract, there are certain exceptions to the rule. These exceptions include evidence of fraud, mistake, or ambiguity in the written contract, as well as evidence of a separate, collateral agreement. The existence of these exceptions allows for the introduction of extrinsic evidence in limited circumstances, where the written contract may not accurately reflect the parties' true understanding or where additional context is necessary to interpret the agreement. The application of the parol evidence rule, therefore, must be balanced against the need to ensure fairness and prevent the enforcement of contracts that do not reflect the parties' true intent.

Related terms

Extrinsic Evidence: Evidence outside of the written contract, such as prior negotiations, conversations, or agreements, that is used to interpret or supplement the terms of the written agreement.

Integrated Contract: A written contract that is intended to be the complete and final expression of the parties' agreement, excluding any prior or contemporaneous oral or written agreements.

Merger Clause: A contractual provision that expressly states the written agreement is the complete and final expression of the parties' understanding, superseding any prior or contemporaneous agreements.