What Is the Parol Evidence Rule?

The parol evidence rule is a principle of contract law that exists to protect individuals from fraudulent or inadequate agreements. The basic principle is that when parties enter into a written contract, no other evidence can be used to modify or change its terms. Any oral promises or agreements made before or at the time of contract are not legally binding and, therefore, such promises may not be used as a basis to prove or disprove certain contract terms.

What Is the Purpose of the Parol Evidence Rule?

The purpose of the parol evidence rule is to make sure that contracts can be relied upon and that each party knows exactly what has been agreed upon in the contract. A written contract is intended to be a complete agreement between the two parties, which should be interpreted as it is written and without any reliance on anything outside of the contract. The parol evidence rule often prohibits the parties from using extrinsic evidence to make changes to the written contract or to prove the meaning of contract terms.

Examples of How the Parol Evidence Rule Applies to Contracts

To better understand the parol evidence rule, consider the following examples:

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• A tenant decides to sign a lease with a landlord and verbally promises the landlord to pay the rent on time each month. The lease agreement does not contain any such language. If the tenant fails to pay the rent on time, the landlord cannot use the tenant’s verbal promise to seek payment.
• A contractor enters into a contract to repair a building and agrees to finish the job within a specific amount of time. During the project, the contractor and the owner make several verbal agreements to change certain aspects of the contract’s scope of work. In this case, the owner cannot use any of the verbal agreements as proof that the scope of work has changed unless the modifications have been recorded and signed by both parties.

Related Legal Concepts

Understanding the parol evidence rule often goes hand in hand with other evidence principles in contract disputes. The best evidence rule requires that original documents be presented when their contents are in question, while rules governing admissible evidence determine what information courts will consider. Documentary evidence plays a crucial role in contract interpretation, as written agreements typically take precedence over oral statements under the parol evidence rule.

The Bottom Line

The parol evidence rule serves as a fundamental protection in contract law, ensuring that written agreements remain the definitive source of contractual obligations. This rule prevents parties from undermining carefully negotiated written terms through claims about prior oral promises or side agreements. Understanding this principle helps parties recognize the importance of including all essential terms in their written contracts. For guidance specific to your situation, always consult a qualified, licensed attorney.