What Is Parol Evidence in Contracts?

Parol evidence refers to any oral or written statements that are not included in the written contract but may be used to interpret or explain the contract's terms. Generally, courts will not admit parol evidence to contradict a fully integrated written agreement.

Parol evidence is a doctrine in contract law governing the admissibility of oral or written statements made prior to or at the time of signing a written contract. This doctrine primarily comes into play when parties dispute the meaning or intent of an integrated agreement. If a contract is deemed fully integrated, this means its written terms encompass all agreements between the parties, leading courts to exclude extrinsic evidence that contradicts its content.

The purpose of the parol evidence rule is to promote the reliability of written documents and to prevent fraud by minimizing reliance on informal agreements or oral statements that might alter the understood terms of a written contract. However, exceptions exist where parol evidence may be admissible, such as cases involving ambiguity, fraud, duress, or mistakes.

One key consideration is whether the contract is a fully integrated agreement, which indicates that the parties intended the document to be a complete and final representation of their agreement. The assessment of integration often hinges on the contract's language and context, thus requiring careful judicial interpretation.

In applying the parol evidence rule, courts also analyze whether the parties may present evidence of prior negotiations or contemporaneous agreements to resolve ambiguities or clarify terms, ensuring that the true intent of the parties is captured while preserving the sanctity of written contracts.

• 1Masterson v. Sine (1968) - established the standards for determining integration and admissibility of parol evidence.
• 2U.C.C. § 2-202 - governs parol evidence for contracts under the Uniform Commercial Code, highlighting flexibility in commercial transactions.
• 3Sherrod v. Tarrant (1974) - clarified exceptions to the parol evidence rule regarding ambiguous terms.
• 4Pacific Gas & Electric Co. v. G.W. Thomas Drayage & Rigging Co. (1968) - addressed the integration of express contract terms with prior agreements.
• 5Baker v. McDade (1991) - explored the interplay between written agreements and extrinsic evidence in elucidating intent.

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