The Parol Evidence Rule is a legal doctrine in contract law that prohibits the introduction of prior or contemporaneous external (parol) agreements or statements that contradict the terms of a written contract. The rule is intended to preserve the integrity of written agreements by precluding the admission of oral or extrinsic evidence that would alter or add to the written terms.
Definition of Parol Evidence Rule
In legal terms, the Parol Evidence Rule asserts that:
“When parties have entered into a written contract that they intend to be a complete and final expression of their agreement, they may not later introduce evidence of prior or contemporaneous oral or written statements that contradict or vary the terms of the written contract.”
Principles and Application
Complete and Partial Integration
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Complete Integration: A fully integrated contract is one that the parties intended to be a complete and exclusive statement of the terms of their agreement. No parol evidence is admissible to add, modify, or contradict the written terms.
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Partial Integration: A partially integrated contract includes some, but not all, terms of the agreement. Parol evidence may be allowed to explain or supplement the contract but cannot contradict it.
Exceptions to the Rule
Partially Integrated Contracts
In the context of partially integrated contracts, extrinsic evidence is permissible to explain the terms or clarify ambiguities without contradicting the written terms.
Subsequent Modifications
Parol evidence is admissible to show modifications or rescissions that occur after the contract has been executed.
Fraud, Mistake, or Misrepresentation
Parol evidence can be admitted to demonstrate that the contract was executed under fraud, mistake, or misrepresentation.
Condition Precedent
If an agreement was subject to a condition precedent (an event that must occur before the contract becomes effective), parol evidence is admissible to prove that the condition was met or not met.
Ambiguities
Parol evidence may be used to interpret ambiguous terms within the contract.
Historical Context
The Parol Evidence Rule has its roots in common law and has been codified in various statutes and codes, including the Uniform Commercial Code (UCC) applicable in the United States. The doctrine has evolved over time but consistently aims to ensure the reliability and finality of written agreements.
Examples
Example 1: Real Estate Contract
- Scenario: A buyer purchases a house and signs a written contract. The seller later claims there was an oral agreement to include certain furniture in the sale.
- Application: Under the Parol Evidence Rule, the buyer could argue that the written contract (which did not mention the furniture) should stand as the complete agreement, barring the seller from introducing the oral agreement.
Example 2: Employment Agreement
- Scenario: An employee signs a written employment contract specifying a salary but later claims there was an oral promise for an end-of-year bonus.
- Application: The employer can invoke the Parol Evidence Rule to exclude the employee’s claim about the oral promise, emphasizing that the written contract did not include such a term.
FAQs on Parol Evidence Rule
Q1: What is the purpose of the Parol Evidence Rule?
- A: The purpose is to maintain the integrity of written contracts by preventing the introduction of extrinsic evidence that contradicts the expressed terms of the contract.
Q2: Can parol evidence be introduced to explain an ambiguous term in a contract?
- A: Yes, parol evidence can be used to clarify ambiguities within the contract.
Q3: Are there exceptions to the Parol Evidence Rule?
- A: Yes, notable exceptions include evidence of fraud, mistake, misrepresentation, subsequent modifications, condition precedents, and clarifications of ambiguities.
Q4: Does the Parol Evidence Rule apply to all contracts?
- A: It generally applies to written contracts intended to be the complete and final representation of the parties’ agreement. However, the applicability can vary by jurisdiction and the specific terms of the contract.
Q5: How does the Parol Evidence Rule differ between jurisdictions?
- A: While the core principle remains consistent, specific applications and exceptions may vary based on jurisdictional statutes and case law.
Final Summary
The Parol Evidence Rule is an essential doctrine in contract law designed to uphold the integrity and finality of written agreements by restricting the use of prior or contemporaneous external evidence that contradicts the contract’s terms. Understanding its applications, exceptions, and nuances is crucial for both legal practitioners and parties entering into written agreements.
References
- Restatement (Second) of Contracts - A set of principles intended to clarify the law of contracts.
- Uniform Commercial Code (UCC) - A comprehensive set of laws governing commercial transactions in the United States.
- Common Law Jurisdictions - Legal precedents and case law shaping the application of the Parol Evidence Rule.
By comprehensively understanding the Parol Evidence Rule, parties to a contract and legal professionals can ensure the adherence to the sanctity of written agreements, thereby reducing disputes and fostering predictability in contractual relationships.
