THE PAROL EVIDENCE RULE

The Parol Evidence Rule

The Parol Evidence Rule

Introduction

Parole evidence is a rule of evidence that bestows a preferred status on final written agreements. The rule is designed to provide stability in business transactions. The rule protects the agreement from the risk of perjured testimony and the risk of uncertain testimony of a party with a "slippery" and "self-serving" memory. At trial, the rule excludes earlier oral agreements or any contemporaneous oral agreements. The basis of the rule is that these earlier agreements were not intended to survive, but to be merged into the final agreement.

The Parol Evidence Rule or Presumption prevents a party to a written contract from calling evidence about any contractual promise that may have been made to him verbally

A contract will not be implied where it would result in inequity or harm. Where doubt and divergence exist in the minds of the parties, the court may not infer a contractual relation-ship. If, after an agreement expires, the parties continue to perform according to its terms, an implication arises that they have mutually assented to a new contract that contains the same provisions as the old agreement. A contract implied in fact, which is inferred from the circumstances, is a true contract, whereas a contract implied in law is actually an obligation imposed by law and treated as a contract only for the purposes of a remedy. With respect to contracts implied in fact, the contract defines the duty; in the case of quasi-contracts, the duty defines and imposes the agreement upon the parties. Contractual provisions that indicate gross one-sidedness in favor of the seller include limiting damages or the rights of the purchaser to seek court relief against the seller, or disclaiming a Warranty (i.e., a statement of fact concerning the nature or caliber of goods sold the seller, given in order to induce the sale, and relied upon by the purchaser)(Florida, 2005).

Unconscionability is ascertained by examining the circumstances of the parties when the contract was made. This doctrine is applied only where it would be an affront to the integrity of the judicial system to enforce such a contract.

Discussion

The Parole Evidence Rule holds that where an agreement has been reduced to writing and is intended to be the final and complete expression of the agreement between the parties, any evidence of earlier oral or written agreements or any contemporaneous oral agreements are not admissible in a court of law to vary, add to, or contradict the terms of the written agreement.

When Does The Parole Evidence Apply? There are two key issues: First, one must determine whether the parties intended the writing to be the final written agreement. Second, one must determine whether there is partial or total integration of the prior oral or written agreements. If a court determines that only partial integration exists, the agreement may be supplemented by additional terms. Seems simple, right? Well, five different tests have been developed to apply this ...