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:
- 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.
Conclusion
The parol evidence rule is an important concept to understand when entering into a contract. Knowing how this rule works and how it applies to a particular contract is essential to ensuring that the contract is enforceable and that it cannot be altered by extrinsic evidence. If you are uncertain about how the parol evidence rule applies to a particular contract, it is always best to consult a lawyer for advice.