Parol Evidence Rule Flashcards
Parol Evidence Rule (PER)
Parties to a FINAL, COMPLETE, WRITTEN, SIGNED contract cannot rely on parol evidence to CONTRADICT the terms of that agreement
“Parol evidence” means any personal recollection, memo, letter, email, draft contract or other source that was generated prior to the final agreement that describes the contract terms or negotiations.
Reasons for the Parol Evidence Rule #1
Holds parties to the terms that they signed off on in the final, written agreement. (Lesson: If the document does not reflect the deal you thought you negotiated, don’t sign it).
Reasons for the Parol Evidence Rule #2
Reliance on the signed document prevents unfair surprise &/or lying about allegedly agreed-upon terms after the fact by one party, especially when the other negotiator may have died, quit, been fired or doesn’t remember (compare to course introduction leasing problem).
When Parol Evidence is Admissible to define contract terms #1
To prove terms that only clarify ambiguity in the signed agreement.
When Parol Evidence is Admissible to define contract terms #2
To prove terms that are consistent with (not contradictory to) terms in the signed agreement.
When Parol Evidence is Admissible to define contract terms #3
To prove SUBSEQUENT modifications. (Because these terms are NOT PRIOR to the signed contract, PER does not apply).
Example: Contract calls for 1 year free maintenance in farm equipment sale.
Seller could use file memo, recollection of discussions or other parol evidence to prove that “maintenance” was only intended to include routine warranty service, not repairs of damage caused when equipment hits a tree stump.
Example: Contract calls for 1 year free maintenance in farm equipment sale.
Buyer could use file memo, recollection of discussions or other parol evidence to prove that maintenance was to occur at buyer’s premise, not by shipping equipment back to seller’s location.
