Parol Evidence Rule

Definition

The parol evidence rule is a legal principle that states the meaning of a contract cannot be changed by reference to statements made by the parties to the contract before the contract was formed.

Purpose

The parol evidence rule ensures that the terms of a written contract are upheld and that any prior or contemporaneous oral statements or agreements that contradict the written contract are not considered in its interpretation. This rule helps provide clarity and stability in contractual relationships.

Examples of Use

• Contract Disputes: In a dispute over a contract's terms, the court will rely on the written contract rather than any prior verbal agreements.
• Real Estate Transactions: Ensuring that all terms of a property sale are included in the written agreement, excluding any prior verbal discussions.
• Business Agreements: Maintaining the integrity of written contracts in business dealings by disregarding any prior oral modifications.

Related Terms

• Integration Clause: A clause in a contract stating that the written document represents the entire agreement between the parties.
• Extrinsic Evidence: Evidence from outside the written contract, such as oral statements or prior agreements.
• Contract Interpretation: The process of determining the meaning and intent of the terms in a contract.

Notes

• Exceptions: There are exceptions to the parol evidence rule, such as evidence of fraud, mistake, or subsequent modifications to the contract.
• Written Agreements: To avoid disputes, it is crucial to ensure that all important terms and agreements are included in the written contract.