Parol Evidence

Parol Evidence: Definition and Context

Parol Evidence refers to any verbal statements or agreements that are made prior to or alongside the writing of a contract but are not included within the writing itself. The Parol Evidence Rule is a principle in contract law that excludes extrinsic evidence (such as oral statements or prior written agreements) that contradict the terms of a written contract, with the intent to preserve the integrity of written agreements.

Detailed Explanation

The Parol Evidence Rule aims to prevent misunderstandings and discrepancies by ensuring that the written contract stands as the definitive and complete agreement between the parties. Oral evidence that contradicts or adds to the terms of a written contract is generally inadmissible in court, unless the following exceptions apply:

Mistake: If there is a clerical or mutual mistake in the written agreement.
Fraud: If the contract was entered into based on fraudulent misrepresentations.
Duress or Undue Influence: If one party was forced or unfairly persuaded into the contract.
Subsequent Modifications: Any modification to the contract agreed upon after the original writing.
Conditions Precedent: If oral evidence is introduced to show that the written contract was subject to a condition that had to occur before the contract would become enforceable.

Examples in Real Estate

Purchase Agreement Dispute:
- Carter agrees to purchase a house from Dooley, and both sign a comprehensive purchase agreement. Carter later claims that Dooley verbally promised to cover all the loan discount points. Under the Parol Evidence Rule, the court would not consider Carter’s claim if the written contract does not include such a provision.
Lease Negotiations:
- A tenant and a landlord discuss the terms of a lease over several meetings. The written lease stipulates that the tenant is responsible for all repairs. The tenant later claims the landlord promised verbally to take care of major repairs. The Parol Evidence Rule would generally exclude this oral promise from consideration unless it falls under an exception, such as fraud or mutual mistake.

Frequently Asked Questions

What is the primary purpose of the Parol Evidence Rule?

Answer: The primary purpose is to preserve the integrity of written agreements by excluding prior or contemporaneous oral statements that contradict the written terms, thus preventing one party from presenting conflicting evidence outside the scope of the written contract.

Are there any exceptions to the Parol Evidence Rule?

Answer: Yes, exceptions include cases of mistake, fraud, duress, undue influence, subsequent modifications, and conditions precedent.

Can a written contract be modified by subsequent oral agreements?

Answer: Yes, modifications made after the original contract can be admitted as evidence if both parties mutually agree to those changes.

1. Integration Clause: A provision in a contract that declares that the contract is the complete and final agreement between the parties, thus preventing any external agreements from being admitted as evidence.

2. Statute of Frauds: A legal principle that requires certain types of contracts to be in writing to be enforceable, such as those pertaining to real estate transactions.

3. Extrinsic Evidence: Evidence that is not contained within the document itself; usually oral or written statements made prior to or contemporaneously with the execution of the written contract.

4. Merger Clause: Synonymous with Integration Clause, it states that the written contract is the entire agreement and supersedes all prior oral and written agreements.

Online Resources

References

Farnsworth, E. A. (2010). Farnsworth on Contracts. Wolters Kluwer.
Corbin, A. L., & Perillo, J. M. (2002). Corbin on Contracts. Matthew Bender.
Knapp, C. M., Crystal, N. M., & Prince, H. G. (2019). Problems in Contract Law: Cases and Materials. Wolters Kluwer.

Suggested Books for Further Studies

“Strong Covenant: The Purpose and Power of Written Agreements in Real Estate Transactions” by Norman Davidson
“Principles of Contract Law” by Prof. Richard Stone and Prof. James Devenney
“Real Estate Law” by Marianne Jennings
“Understanding Contracts” by Jeffrey Ferriell

Real Estate Basics: Parol Evidence Fundamentals Quiz

### Does the Parol Evidence Rule apply to verbal agreements made after the written contract is signed? - [ ] Yes, all verbal agreements. - [ ] No, all verbal agreements are disallowed. - [x] No, exceptions are allowed for modifications after the contract. - [ ] Yes, without any exceptions. > **Explanation:** The Parol Evidence Rule generally applies to verbal agreements made prior to or at the time of writing the contract. Verbal agreements or modifications made after the signing of the contract can be considered if mutually agreed upon. ### Are oral modifications to a written contract ever permissible under the Parol Evidence Rule? - [x] Yes, if made post-agreement and mutually consented. - [ ] No, they are never permissible. - [ ] Yes, always permissible. - [ ] Only if signed by a third party. > **Explanation:** The Parol Evidence Rule allows for oral modifications if they are made after the original contract and both parties agree to these changes. ### Which of the following is a key goal of the Parol Evidence Rule? - [ ] Prevent parties from drafting formal contracts. - [x] Preserve the integrity of written agreements. - [ ] Ensure no verbal agreements are ever made. - [ ] Encourage oral agreements. > **Explanation:** The core goal of the Parol Evidence Rule is to preserve the integrity and finality of written agreements by excluding any previous or simultaneous oral agreements. ### Which of these conditions is NOT an exception to the Parol Evidence Rule? - [ ] Fraud. - [x] Routine business practice. - [ ] Mistake. - [ ] Duress. > **Explanation:** Routine business practices are not considered exceptions to the Parol Evidence Rule. Exceptions include conditions such as fraud, mistake, duress, and subsequent modifications. ### In case of ambiguity in a written contract, does the Parol Evidence Rule allow for interpretative aspects? - [x] Yes, if the terms of the contract are ambiguous. - [ ] No, not under any circumstance. - [ ] Only if requested by one party. - [ ] Yes, only in verbal contracts. > **Explanation:** If the written contract contains ambiguous terms, the Parol Evidence Rule allows for reasonable interpretative aspects from previous negotiations to clarify the meaning. ### When is the Parol Evidence Rule required to be enforced strictly? - [ ] For oral agreements surpassing 10 years. - [x] When an integrated agreement is in place. - [ ] For verbal contracts exceeding $100,000. - [ ] Only during property transfer. > **Explanation:** The Parol Evidence Rule is strictly enforced especially when an integrated agreement (containing an integration clause) is in place, designating it as the final and complete contract. ### Does the Parol Evidence Rule apply to prior written agreements? - [x] Yes, in some circumstances. - [ ] No, only to oral agreements. - [ ] Yes, always. - [ ] No, never. > **Explanation:** The Parol Evidence Rule can apply to prior written agreements as well as oral ones since the focus is on excluding all prior or contemporaneous conditions not included in the final writing. ### If a written contract contains a merger clause, what does it signify? - [ ] All future agreements must be verbal. - [x] The contract is the complete and final agreement. - [ ] Only the current version is valid indefinitely. - [ ] It allows for automatic renewals. > **Explanation:** A merger clause within a written contract signifies that the contract is the complete and final agreement between the parties and supersedes any prior oral or written agreements. ### Can the Parol Evidence Rule prevent consideration of written modifications to a signed contract? - [ ] Yes, in all cases. - [x] No, if modifications occur post-agreement. - [ ] Never, written modifications are exempt. - [ ] Yes, if signed by only one party. > **Explanation:** The Parol Evidence Rule does not prevent considering written modifications if such modifications are agreed upon after the original contract. ### Does the Parol Evidence Rule generally consider oral evidence to prove prior statements? - [ ] Yes, always. - [x] No, typically excluded. - [ ] Only for future intentions. - [ ] Only if one party consents. > **Explanation:** Under the Parol Evidence Rule, oral evidence to prove prior statements that contradict the written contract is typically excluded unless an exception applies.