An Alternative Approach to the Parol Evidence Rule: A Rejection of the Restatement (Second) of Contracts; Mitchill v. Lath Revisited

• Author: Frank L. Schiavo
• Position: Associate Professor of Law, Barry University Dwayne O. Andreas School of Law; B.S. 1956, Wharton School, University of Pennsylvania
• Pages: 759-777

AN ALTERNATIVE APPROACH TO THE PAROL

EVIDENCE RULE: A REJECTION OF THE

RESTATEMENT (SECOND) OF CONTRACTS;

MITCHILL V. LATH REVISITED

FRANK L. SCHIAVO*

I. INTRODUCTION

As early as 1898, Professor Thayer observed that “[f]ew things are

darker than [the parol evidence rule], or fuller of subtle difficulties.”1

Professor Wigmore similarly noted, “[I]t is not strange that the so-called

parol evidence rule is attended with confusion and obscurity which make it

the most discouraging subject in the whole field of evidence.”2 Professor

Sweet described it as “a maze of conflicting tests, subrules, and

exceptions,”3 and Professor Murray noted that the rule has been described

as “a legal concept whose mysteries are familiar to many but fathomed by

few.”4

It is not surprising that the rule confuses students, teachers, and

scholars. The Restatement (Second) of Contracts does nothing to alleviate

the confusion. Its methodology only adds to it. This Article suggests an

approach to the parol evidence rule that is simpler, but retains the essence

of the rule.

Copyright © 2013, Frank L. Schiavo.

* Associate Professor of Law, Barry University Dwayne O. Andreas School of Law;

B.S. 1956, Wharton School, University of Pennsylvania; J.D. 1959, Villanova University

School of Law; LL.M. (Taxation) 1965, New York University School of Law. The author

teaches in the areas of Contracts; Federal Income Tax; and Wills, Trusts, & Estates. The

author is indebted to Susan S. Bendlin and Daniel P. O’Gorman for th eir comments and

suggestions on drafts of this Article and to his research assistant, Karen Nolan, who

rendered valuable assistance in finalizing this Article.

1 JAMES BRADLEY THAYER, A PRELIMINARY TREATISE ON EVIDENCE AT THE COMMON

LAW 390 (Augustus M. Kelley Publishers 1969) (1898).

2 9 JOHN HENRY WIGMORE, EVIDENCE IN TRIALS AT COMMON LAW § 2400 (James H.

Chadbourn rev., Little, Brown & Co. 1981).

3 Justin Sweet, Contract Making and Parol Evidence: Diagnosis and Treatment of a

Sick Rule, 53 CORNELL L. REV. 1036, 1036 (1968).

4 JOHN EDWARD MURRAY, JR., MURRAY ON CONTRACTS § 82(B) (LexisNexis, 4th ed.

2001).

760 CAPITAL UNIVERSITY LAW REVIEW [41:759

II. THE RULE

The Restatement (Second) of Contracts describes the parol evidence

rule as a “binding integrated agreement [that] discharges prior agreements

to the extent that it is inconsistent with them” or “to the extent that they are

within its scope.”5 The rule is designed to prevent adding terms to a

written agreement that the parties may have agreed to prior to or

contemporaneously with the written agreement, but that were omitted from

the final written agreement.6 The rule only applies if the second agreement

is written, regardless of whether the first agreement is oral or written.7

It must be understood that the parol evidence rule is not applicable

until the written agreement is enforceable.8 Thus, any evidence would be

admissible to show the agreement is unenforceable due to fraud, mistake,

illegality, or accident.9 Furthermore, if none of the terms in the writing are

final (e.g., a letter of intent or preliminary memorandum), the parol

evidence rule is not applicable because such a writing is not enforceable.10

The parol evidence rule serves two separate functions and answers the

question of why the evidence was offered: (1) the first function is

determining what terms are part of the contract, i.e., what is the content of

the written agreement?11; (2) the second is determining what those terms

mean, i.e., it has a role in interpretation.12 Professor Margaret N. Kniffen

compares these two functions to an Emperor and Empress, each “clothed in

different requirements”:

Contract interpretation, which can be labeled the Empress,

functions to assign meaning to terms already contained

within a contract. In contrast, the parol evidence rule,

which can be designated the Emperor, determines whether

5 RESTATEMENT (SECOND) OF CONTRACTS § 213(1)–(2) (1981).

6 MURRAY, supra note 4, § 82(B).

7 Id. § 82(A) (“Where the second agreement is evidenced by a writing, the parol

evidence process may become operative whether the prior agreement was oral or written.”).

8 See JOSEPH M. PERILLO, CALAMARI AND PERILLO ON CONTRACTS § 3.2 (6th ed. 2009).

9 Arthur L. Corbin, The Parol Evidence Rule, 53 YALE L.J. 603, 625–26 (1944).

10 See id. at 638.

11 PERILLO, supra note 8. This leads to two questions: “[W]hether (1) the writing is [an]

integration, and (2) if so, whether it is a total or only a partial integration.” Id. See also

RESTATEMENT (SECOND) OF CONTRACTS § 210(1)–(2) (1981).

12 See PERILLO, supra note 8.