What is the “parol evidence rule”?

The parol evidence rule states that, if an agreement between two parties is made in writing, the parties may not present evidence in court of any oral or implied agreement that contradicts what is written down.  Do not confuse “parol” in this case with “parole,” which is what a person receives after he finishes a prison sentence.  The parol evidence rule has to do with contracts, not criminal law.

The parol evidence rule can be thought of as the “four corners” rule.  If a contract exists, the court must look for evidence of the contract’s terms by reading what is inside the “four corners” of the paper the contract is printed on.  (In today’s world of electronic documents, the “four corners” may be electronic, along with the rest of the contract.)  Evidence that doesn’t appear inside the “four corners” of the contract, such as comments made by the plaintiff or defendant who are now facing off in a breach of contract case, cannot be considered if they contradict what is inside the contract’s “four corners.”

For example, suppose that in a breach of contracts case, the plaintiff and defendant made a contract on September 1.  The contract they wrote down states that the plaintiff will hand over the title to her car to the defendant by September 15, and the defendant will pay the plaintiff $35,000 for the car by September 20.  (It’s a nice car.)  On September 15, the plaintiff hands over the title to her car – but when September 20 rolls around, the defendant is nowhere to be found.

The plaintiff, who is now out both a car and $35,000, sues the defendant for breach of contract.  At trial, the plaintiff presents the written contract as real evidence of the agreement she and the defendant made and that the defendant breached when he didn’t have the cash for the plaintiff on September 20 as stated.  The defendant, however, takes the stand and argues that even though the written contract says “September 20,” the plaintiff told him at the signing, “you know, if you can’t get that money together until the 30th, I totally understand.”

The defendant’s claim that the plaintiff was okay with September 30 as a payment date, instead of September 20, will probably be barred from evidence on the basis of the parol evidence rule.  The plaintiff and defendant had a chance to sit down together and talk through exactly the kind of terms they wanted in the contract.  If the defendant had needed or wanted September 30 as a due date, it was his responsibility to make sure that the correct date was included in the contract, and that he negotiated with the plaintiff to make sure September 30 was okay.  The fact that the parties went with September 20, on the other hand, indicates that that was the date they formally negotiated – the date they “really” wanted at the time.  The parol evidence rule forbids the defendant from using the conversation over the signing of the contract as a way to get out of the contract’s clear requirements.

Evidence outside the contract may also be excluded if it is in writing, as long as that writing does not form part of the contract.  For instance, in the example above, suppose that the plaintiff and defendant signed a contract with a payment date of September 20.  Instead of saying out loud that the defendant could pay on September 30, however, the plaintiff texted this comment a day later.  Unless there is significant evidence to indicate that this text created a new contract, it will be barred under the parol evidence rule as well.

There are several situations in which “outside” evidence will be admitted into court even if a written contract exists, however.  These include:

  • to help the judge or jury interpret the terms in the contract
  • to show that the contract is ambiguous, and that therefore outside evidence is needed to figure out its actual meaning
  • to show that the contract is not valid
  • to show that a term in the contract is a mistake made when transcribing a copy of the contract (with technology that can make accurate copies easily, however, this reason is less often used than it once was)
  • to correct a mistake
  • to show that fraud, duress, unconscionable behavior, or tortious interference with contract occurred
  • to show that consideration was never paid
  • to identify the parties, especially if one or both of them have changed names via marriage, corporate merger, or other legal means
  • to make changes in the contract after the final written contract has been agreed to, if the contract states it can be changed orally

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