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Parol Evidence Rule

What Is the Parol Evidence Rule?

The parol evidence rule is a legal doctrine that prevents parties in a contract dispute from presenting extrinsic evidence of prior or contemporaneous agreements that contradict, modify, or vary the terms of a written contract. The rule aims to preserve the integrity of written agreements by excluding evidence that might alter the clear terms set forth in the contract.

Parol Evidence Rule Explained

The parol evidence rule applies to written contracts that appear to be whole and complete. If a contract is deemed to be fully integrated, meaning it is intended to be a final and complete expression of the parties' agreement, then evidence of any prior or contemporaneous oral or written agreements that contradict the written terms is generally inadmissible in court.

Exceptions to the Parol Evidence Rule:

While the parol evidence rule is strict, there are several notable exceptions where extrinsic evidence may be admissible:

1. Ambiguity: If the contract terms are ambiguous, parol evidence can be used to clarify the meaning of the terms.

2. Fraud, Duress, or Mistake: Evidence of fraud, duress, or mistake can be introduced to show that the contract is invalid.

3. Subsequent Agreements: Evidence of agreements made after the written contract was signed can be admissible.

4. Collateral Agreements: Separate agreements that do not contradict the written contract but are related to it can sometimes be introduced.

5. Condition Precedent: Evidence that a written agreement would only become effective upon the occurrence of a certain condition can be admissible.

The Term Parol Evidence Rule in Different Legal Contexts

Contract Law: In contract law, the parol evidence rule is fundamental in litigation involving contract disputes. Courts rely on the rule to determine whether extrinsic evidence should be admitted to interpret or challenge the terms of a written contract. The rule promotes certainty and predictability in contractual relationships by emphasizing the written document as the primary source of the parties' agreement.

Commercial Transactions: In commercial transactions, the parol evidence rule ensures that business agreements documented in writing are honored as the definitive record of the deal. This protects businesses from potential misunderstandings or disputes over oral discussions or informal communications that occurred before or at the time of signing the contract.

Real Estate: In real estate, where transactions often involve detailed and formal written contracts, the parol evidence rule prevents parties from altering the terms of a purchase agreement or lease through oral statements or informal writings not included in the contract. This provides stability and clarity in property transactions.

Common Misconceptions About the Meaning of Parol Evidence Rule

One common misconception is that the parol evidence rule completely bars any external evidence related to a contract. In reality, the rule only excludes evidence that contradicts or modifies the written terms of a fully integrated contract, and several exceptions allow for extrinsic evidence under specific circumstances.

Another misconception is that the parol evidence rule applies to all written agreements. However, the rule primarily applies to contracts intended as the final and complete agreement between the parties. If a contract is not fully integrated, meaning it is not intended to be the entire agreement, parol evidence may still be admitted.

Lastly, some believe that the parol evidence rule is an outdated legal principle with little relevance today. On the contrary, it remains a critical aspect of modern contract law, ensuring that written agreements are upheld and that parties cannot easily undermine written contracts through subsequent or contemporaneous oral or informal agreements.

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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
Contracts and Agreements, Freedom of Information Act, Government Contracts, Employment and Labor, State, Local And Municipal Law, Government and Tax
Birmingham, Michigan Contracts and Agreements Lawyer

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What Is the Parol Evidence Rule?

Parol Evidence Rule Explained

The Term Parol Evidence Rule in Different Legal Contexts

Common Misconceptions About the Meaning of Parol Evidence Rule

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