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Parol Evidence

What Is Parol Evidence?

Parol evidence refers to any oral or written statements or agreements that are not included in the written contract but are related to the contract's terms. Under the parol evidence rule, such evidence is typically inadmissible to alter, contradict, or add to the terms of a written contract that appears to be whole and final.

Parol Evidence Explained

The parol evidence rule is a substantive common law rule in contract cases. It aims to preserve the integrity of written agreements by prohibiting parties from introducing prior or contemporaneous outside statements that would change the meaning of the written document.

The rule is based on the idea that the written contract embodies the final and complete agreement between the parties.

Key aspects of the parol evidence rule include:

- Integration: For the parol evidence rule to apply, the contract must be an integrated agreement, meaning it is intended to be the final and complete expression of the parties' agreement. There are two types of integration: complete and partial.

- Complete Integration: A fully integrated contract contains all the terms of the agreement and leaves no room for parol evidence.

- Partial Integration: A partially integrated contract contains some, but not all, terms of the agreement, allowing parol evidence to supplement but not contradict the written terms.

There are several exceptions to the parol evidence rule where outside evidence may be admissible, including:

- Clarification: To clarify ambiguous terms in the contract.

- Fraud, Duress, or Mistake: To show that the contract is void or voidable due to fraud, duress, or mistake.

- Subsequent Modifications: To prove that the parties modified the contract after it was written.

- Collateral Agreements: To show the existence of a separate, collateral agreement that does not contradict the written contract.

The Term Parol Evidence in Different Legal Contexts

Contract Law: In the context of contract disputes, the parol evidence rule is frequently invoked to determine whether outside statements can be used to interpret or modify the written contract.

Commercial Transactions: In commercial law, the parol evidence rule ensures that commercial contracts are clear and unambiguous, thereby providing certainty and reducing the potential for litigation.

Real Estate: Real estate contracts, often subject to strict written requirements, also adhere to the parol evidence rule to avoid disputes over oral agreements that may not be documented in the final written contract.

Common Misconceptions About the Meaning of Parol Evidence

A common misconception about the parol evidence rule is that it completely excludes any evidence outside the written contract. In reality, the rule allows for several exceptions where such evidence can be admitted to clarify, supplement, or challenge the written terms under certain conditions.

Another misunderstanding is that the parol evidence rule applies to all written contracts. However, it specifically applies to integrated agreements that are intended to be the complete and final representation of the parties' intentions. Non-integrated agreements may not invoke the parol evidence rule in the same way.

Additionally, some believe that the rule only pertains to oral statements. The term "parol" historically means oral, but the rule applies to both oral and written extrinsic evidence that is not included in the written contract.

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Drew Davis Van De Grift

Contracts and Agreements Lawyer Serving at Birmingham - Michigan

1895 Bradford Rd, Michigan, 48009-7253

Thomas M. Cooley
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What Is Parol Evidence?

Parol Evidence Explained

The Term Parol Evidence in Different Legal Contexts

Common Misconceptions About the Meaning of Parol Evidence

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