The Parol Evidence Rule

• Author: Franklin G. Snyder, Mark Edwin Burge
• Pages: 337-356

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UNIT 17: THE PAROL EVIDENCE RULE 337

Unit 17

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TERMS AND INTERPRETATION

Part One

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The Parol Evidence Rule

FOCUS OF THIS UNIT

Written Contracts with Oral Terms? Contracts come in many forms. Some are

simple and oral. Some are complex and written. Some involve both oral and written

terms. If a contract is completely written out and intended by the parties to be the

expression of their final deal—a complex, negotiated merger deal between

multinational corporations, for example—the natural tendency is to rely solely on the

writing. On the other hand, if there is no writing at all, oral testimony or other

evidence is necessary to prove the nature of the deal. But what about situations where

some parts of the deal are in writing and some are not?

You have experienced this directly. When you buy something at a local store

and sign a receipt, there is a writing that shows at least the price of the item. But

most of the other terms of the deal—can you carry it out or will it be delivered, what

warranty does it carry, can it be returned to the store, and so forth—will either have

been discussed orally or not discussed at all. If the goods turn out to be defective, you

will have a contract and there will be a writing evidencing it—but all the rest of the

terms will have to be supplied by oral testimony or other evidence—categories that

the law traditionally calls “parol evidence.”

Parol is for Contracts; Parole is for Convicts. The word “parol” —please note

the lack of a final “e”

1

so you can avoid looking silly to other lawyers—is a French

term for “oral.” Nonetheless, parol evidence as used in contract law does not solely

mean “oral” evidence, it means any evidence other than what is in the written

1

[The English word “parole,” despite its different meaning, is also related to the French wo rd

for “oral.” The term in criminal law came from the oral promises that soldiers or prisoners would make

to their captors if they were released, such as a promise not to engage in future hostilities, or to act on

good behavior, hence being “out on parole .” No w that you know the difference, we beg you not to

embarrass us by referring to a “parole evidence rule” in contract law. No such thing e xists.—Eds.]

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338 CHAPTER VI: TERMS AND INTERPRETATION

contract itself. Thus written documents that are not the contract document can be

“parol” evidence to the same extent as oral testimony.

Given that certain cases involve both a written agreement and parol evidence

that tries to contradict or supplement the written agreement, an important question

arises as to how much credit to give the writing. To what extent can a party try to

prove that a contract means something very different from a written document? Are

parties bound by what they sign, or are they free to claim that the contract is

something else entirely?

The Rule. To deal with these issues, English common law over the years

developed what came to be known as the “parol evidence rule,” under which oral

agreements that seem to conflict with a writing the parties have adopted will be

refused enforcement. It rests on at least two assumptions. The first assumption is

that what the parties did at the time of the contract—that is, what they wrote and

signed—is likely to be better evidence of what their actual deal was than is their

subsequent self-serving testimony. The second assumption is that litigation is

expensive and parties should be able to rely on written agreements. If the written

contract requires delivery by August 15, for example, but one party now wants to

argue that the parties really intended delivery “any time so long as it is before

Christmas,” the parol evidence starts with the assumption that what the parties

wrote at the time is more likely to be the “true” agreement as to the delivery date

than what one party now claims—after a dispute has developed—the parties really

intended. Both the legal system and contracting parties benefit if they can know for

certain that “by August 15” means “by August 15” rather than “any time so long as it

is before Christmas.” Neither courts nor parties will then spend time, effort, and

money litigating over the issue.

Downsides to the Rule. Even if we grant these two assumptions, situations

arise in which enforcing the terms of a written agreement can result in injustice. It

would be absurd, for example, to prohibit a party who signed an agreement at

gunpoint from being able to prove the gunman’s threats merely because the contract

says, “The parties are entering this agreement freely and not under compulsion.”

Similarly, if two parties agree to the sale of a motorcycle totaled in a wreck for $50,

and the parties, intending to write $50.00 instead write $5000 (forgetting the

decimal) hardly anyone would argue that a court should force the buyer to pay the

larger amount. Thus, over the years some exceptions have been crafted to the strict

application of the rule. You will meet some in the materials that follow.

Statutory Parol Evidence Rules and Other Variants. While the parol evidence

rule arose as a common law innovation, there are various versions embodied in

statutes, such as UCC § 2-202. Even beyond the UCC, some states have codified their

general rules regarding admissibility of parol evidence, but others have left the rule

as a matter of common law. Each jurisdiction’s exceptions to the parol evidence rule

have developed more or less independently, creating great variation among the