What is the “Parol Evidence Rule”? Prior Agreements and Dealings May Not Be Admissible.

March 23, 2023by Jeffrey Davis

The parol evidence rule is a legal principle that restricts the admissibility of extrinsic evidence (i.e., evidence outside the written contract) to vary or contradict the terms of a fully integrated written contract. Essentially, it states that when parties have executed a written contract that represents the final expression of their agreement, any prior or contemporaneous oral or written statements or agreements that contradict, modify, or vary the terms of the written contract are inadmissible to interpret or enforce the contract.

The rule aims to promote the finality and predictability of contracts by encouraging parties to reduce their agreements to writing and to rely on the plain meaning of the written terms rather than on potentially unreliable and self-serving testimony about oral or implied understandings. However, there are exceptions to the parol evidence rule, such as when there is ambiguity in the written contract or when there is evidence of fraud, mistake, duress, or illegality that affected the formation of the contract.