Parol Evidence Rule Definition and Legal Meaning

On this page, you'll find the legal definition and meaning of Parol Evidence Rule, written in plain English, along with examples of how it is used.

What is Parol Evidence Rule?

Usually the contract between the two parties are written and complete. Even if the contract is oral by nature, some of it is written so as to be enforceable in case of breach of such contracts. Once a contract is final, no oral(Parole) agreement is considered to change or alter the effect of the contract that is written.

History and Meaning of Parol Evidence Rule

The Parol Evidence Rule is a principle in contract law that restricts the use of evidence, such as oral or written statements, to modify or contradict the terms of a written agreement that has already been signed by the parties. The rule was developed in England during the seventeenth century and later adopted in the United States. The rationale behind the rule is to encourage parties to put their agreements in writing and to provide a degree of certainty and predictability in commercial transactions.

In practical terms, the Parol Evidence Rule means that when parties have reduced their agreement to writing and signed it, then any prior oral or written statements that were made in connection with the agreement are inadmissible to change the contractual terms. This rule also applies to subsequent agreements, which cannot override the written contract without a written amendment.

Examples of Parol Evidence Rule

  1. A sells a piece of land to B for $10,000 and signs a written contract. Later, B claims that A agreed to include some furniture in the sale for an extra $500, which was not mentioned in the contract. According to the Parol Evidence Rule, B can't use the oral statement as evidence to modify the written contract.

  2. X and Y are negotiating a lease agreement for X's retail store. During the negotiations, Y orally promises to install new carpeting and lighting fixtures before the lease commences. However, the written contract doesn't mention anything about these improvements. Under the Parol Evidence Rule, X can't use Y's promise to enforce the installation of the improvements, as they were not included in the final, written agreement.

Legal Terms Similar to Parol Evidence Rule

  1. Statute of Frauds - a legal principle that requires certain types of contracts to be in writing in order to be enforceable.

  2. Merger Clause - a provision in a contract that states that the written agreement represents the entire agreement between the parties and supersedes any other prior or contemporaneous agreements.

  3. Integration Clause - a provision in a contract that states that the written agreement represents the final and complete expression of the parties' agreement, and that no outside evidence can supplement or contradict it.