The parol evidence rule is a legal principle that governs the use of extrinsic or external evidence to interpret or modify the terms of a written contract. Under the parol evidence rule, when parties enter into a written contract that is intended to be the final expression of their agreement, extrinsic evidence, such as oral agreements, prior negotiations, or contemporaneous agreements, cannot be introduced to contradict, vary, or add to the terms of the written contract.
Key aspects of the parol evidence rule include:
1. Written Contract: The parol evidence rule applies when parties have reduced their agreement to writing and intend for the written document to serve as the complete and final expression of their agreement. The written contract is considered to represent the parties’ intentions and obligations, and any prior or contemporaneous agreements or understandings are typically presumed to be merged into the written contract.
2. Integration: The parol evidence rule applies to integrated contracts, which are contracts that are intended to be the complete and final expression of the parties’ agreement. An integrated contract may contain a merger clause, also known as an integration clause, which expressly states that the written contract represents the parties’ entire agreement and supersedes any prior agreements or understandings.
3. Purpose: The purpose of the parol evidence rule is to promote certainty and finality in contractual relationships by ensuring that parties are bound by the terms of their written agreements. By prohibiting the introduction of extrinsic evidence to contradict or modify the terms of a written contract, the rule helps prevent disputes and uncertainty regarding the parties’ intentions and obligations.
4. Exceptions: While the parol evidence rule generally prohibits the use of extrinsic evidence to interpret or modify the terms of a written contract, there are several recognized exceptions to the rule. For example, extrinsic evidence may be admissible to clarify ambiguous terms, establish the existence of a separate collateral agreement, or demonstrate fraud, mistake, duress, or other vitiating factors that affect the validity or enforceability of the contract.
5. Application: Courts apply the parol evidence rule when interpreting contracts and resolving disputes between parties. If a party seeks to introduce extrinsic evidence that contradicts or modifies the terms of a written contract, the court will evaluate whether the evidence is admissible under the parol evidence rule and whether any exceptions to the rule apply.
Overall, the parol evidence rule is a fundamental principle of contract law that governs the use of extrinsic evidence in interpreting written contracts. It helps promote clarity, certainty, and enforceability in contractual relationships by ensuring that parties are bound by the terms of their written agreements.
