parol evidence rule

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Overview

The parol evidence rule is an evidentiary rule in contract disputes which generally makes evidence of agreements outside the parties’ written contract inadmissible. That is, under the parol evidence rule any agreement that is not contained within the written contract is inadmissible in court. The rationale behind the rule is to deter untruthful attacks on contracts. 

Exceptions to the Parol Evidence Rule 

The parol evidence rule may, however, work injustice in instances where both parties bargained for a term in good faith but a deficiency in the written contract unintentionally left that term out of the written agreement. Some courts have found that even with the parol evidence rule, they will allow negotiated terms omitted from the written contract, i.e. parol evidence, to be admissible if it meets 3 components:

  1. the term is in form collateral, meaning its subject was closely related to the written contract;  
  2. the term does not contradict the written contract; and
  3. the term must be one not normally included in a written contract. 

For example, in Mitchill v. Lath, an individual purchased a farm provided that the seller tear down an icehouse across the street. The seller orally agreed, but this term was not in the written contract. When the seller refused to tear down the icehouse, the court considered the three requirements to determine whether to admit the oral agreement. It found that the term to tear down the icehouse would normally have been included in the written contract, so the court did not admit it. 

Debate over the Parol Evidence Rule

The parol evidence rule has caused much debate among legal scholars. Mitchill v. Lath describes how two noted scholars, Professor Corbin and Professor Williston have expressed disparate views on the subject. Professor Corbin opposes the parol evidence rule, stating that due to the complex nature of the changing relationships between parties who contract with each other, one can never be sure of when there is a complete expression of the agreement. As such, the law should recognize negotiations that may modify, explain, or supplement the contract. Professor Williston, however, embraces the parol evidence rule. He argues that in order to have finality and to prevent endless litigation, the law must respect a final integration of terms in a contract.

The Parol Evidence Rule Today

A majority of states today no longer use the parol evidence rule, meaning that courts in those states will allow parties to introduce parol evidence at trial. Most recently, the California Supreme Court held in Riverisland Cold Storage v. Fresno-Madera Production Credit Ass'n (2013) that parol evidence is admissible when used to "claim that [a contract] should be voided because [the party/parties] were induced by fraud."

For further information on parol evidence, see this University of Richmond Law School Scholarship Repository article and this University of Chicago Law School journal article.

[Last updated in November of 2021 by the Wex Definitions Team]