What Is The Test For Parol Evidence in Contracts?

The test for parol evidence in contracts is to determine whether the evidence contradicts, modifies, or adds to a written agreement that is intended to be a complete and final statement of the parties' agreement. If the written agreement is deemed integrated, parol evidence is typically inadmissible unless it can establish a separate claim or defense.

Under the parol evidence rule, courts assess whether the written contract is an integrated document, meaning it's intended to be the definitive expression of the parties’ agreement. If a contract is found to be fully integrated, the parol evidence cannot be used to contradict or modify its terms. In contrast, if a contract contains ambiguous terms or is partially integrated, parol evidence may be admissible to clarify those terms or supplement the contract. This rule aims to uphold the integrity of written agreements and mitigate the risks of fraud or misrepresentation come from conflicting oral statements.

Courts often apply a two-step approach: first, determining if the written contract is integrated (complete or partially complete); and second, whether the proffered parol evidence falls within exceptions that allow its admissibility. Some recognized exceptions include situations where the evidence elucidates ambiguous terms, the existence of a separate, consistent oral agreement, or evidence indicating fraud or duress.

Key considerations in the application of the parol evidence rule hinge on the intent of the parties as demonstrated in the written contract and the surrounding circumstances. The use of course confidence to interpret ambiguous terms plays a formidable role in deciding admissibility. Therefore, parties should articulate their intentions clearly in the contract to reduce the potential for disputes surrounding parol evidence.

Notably, the Uniform Commercial Code (UCC) governs contracts involving goods, and it has slightly different provisions regarding the admissibility of oral agreements and other supplementary terms, particularly under UCC § 2-202. Therefore, contracts subject to the UCC could allow for additional context around parol evidence when considering the intent and essence of the agreement.

• 1Corpe v Overton (1833) - established that parol evidence is inadmissible to contradict a written agreement if it is deemed complete.
• 2Masterson v. Sine (1968) - emphasized parol evidence can be used to establish ambiguities not clearly addressed in the written agreement.
• 3Pacific Gas & Electric Co. v. G.W. Thomas Drayage & Rigging Co. (1968) - addressed exceptions to the parol evidence rule related to ambiguities.
• 4U.C.C. § 2-202 (2001) - details the uniform approach to parol evidence in the context of sales contracts.

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