Parol Evidence Rule

Definition

The parol evidence rule is a legal principle that prevents parties in a contract from presenting extrinsic evidence of prior agreements or negotiations that contradict, modify, or vary the written terms of the contract. This rule emphasizes the importance of the final written agreement as the sole source of the parties' intentions and obligations, thereby promoting clarity and certainty in contractual relationships.

5 Must Know Facts For Your Next Test

1. The parol evidence rule applies only to written contracts and does not affect oral agreements unless they are confirmed in writing.
2. The purpose of the parol evidence rule is to maintain the integrity of written contracts by ensuring that all parties adhere to the terms set out in the final document.
3. Courts may allow extrinsic evidence if it serves to clarify ambiguous terms within a contract rather than contradicting its explicit terms.
4. The parol evidence rule does not apply in cases of fraud, duress, or mutual mistake, where extrinsic evidence may be admissible to show that a contract should not be enforced.
5. In drafting contracts, including an integration clause can strengthen the application of the parol evidence rule by explicitly stating that the written document encompasses all agreements between the parties.

Review Questions

• How does the parol evidence rule impact the interpretation of contracts during legal disputes?
  • The parol evidence rule significantly influences how contracts are interpreted by limiting the use of outside evidence to clarify or change what has already been documented. When a dispute arises, courts will generally rely on the written terms of the contract as the definitive expression of the parties' intentions. This means that any prior discussions or agreements not included in the written contract cannot be used to alter its meaning, ensuring that both parties are bound by what they formally agreed upon.
• Evaluate how including an integration clause in a contract can affect the applicability of the parol evidence rule.
  • Including an integration clause in a contract strengthens the application of the parol evidence rule by clearly stating that the written agreement is complete and final. This clause serves as a barrier against introducing any external agreements or discussions that might contradict or add to the written terms. It reinforces that any prior negotiations are irrelevant once the parties have executed the document, thereby promoting certainty and reducing potential disputes over what was intended before signing.
• Analyze a scenario where extrinsic evidence might be allowed despite the parol evidence rule, and explain why this exception is significant.
  • Consider a situation where two parties enter into a written contract that includes ambiguous language about delivery timelines. If one party claims they were assured during negotiations that delivery would happen within two weeks, extrinsic evidence may be admissible to clarify this ambiguity. This exception is significant because it highlights that while the parol evidence rule aims to uphold written agreements, courts recognize situations where ambiguity can lead to misunderstandings. Thus, allowing some extrinsic evidence promotes fairness and helps ensure that contracts reflect true intentions, especially when language is unclear.

Related terms

Written Contract: A formal agreement that is documented in writing, detailing the rights and obligations of the parties involved.

Extrinsic Evidence: Evidence originating from outside the written contract, such as oral statements or prior negotiations that are not included in the final document.

Integration Clause: A provision within a contract stating that the written document represents the complete and final agreement between the parties, often reinforcing the parol evidence rule.