parol evidence rule

Overview

The parol evidence rule governs the extent to which parties to a case may introduce into court evidence of a prior or contemporaneous agreement in order to modify, explain, or supplement the contract at issue. The rule excludes the admission of parol evidence. This means that when the parties to a contract have made and signed a completely integrated written contract, evidence of antecedent negotiations (called "parol evidence") will not be admissible for the purpose of varying or contradicting what is written into the contract. 

Exceptions to the Parol Evidence Rule 

Some have argued that parol evidence should be admissible, as it may reflect ideas agreed upon by both parties but left out of the contract for some reason (possibly in bad faith by one party). Some courts have found that even with the parol evidence rule, they will allow antecedent negotiations to be admissible as evidence if the evidence meets 3 components:

  1. The agreement must be a collateral one
  2. The agreement must not contradict elements of the written contract
  3. The agreement must be something new that was not in the first contract
    1. The main rationale behind this component is that if the antecedent agreement was really agreed upon and liked by both parties, and if it is clearly connected, then it should have been included in the written contract 

Debate over the Parol Evidence Rule

The parol evidence rule has caused much debate among legal scholars. Two noted scholars, Judge Corbin and Judge Williston have expressed disparate views on the subject:

  1. Judge 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
  2. Judge 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.