Understanding the Power and Limitations of Parol Evidence in Contracts
Parol Evidence refers to oral statements or promises that are not included in a written contract. According to the parol evidence rule, once a written contract is signed, all previous oral agreements merge into the written document. This means the written agreement generally cannot be changed or contradicted by oral testimony unless circumstances involve a mistake or fraud.
The Parol Evidence Rule and Its Applications
The parol evidence rule is grounded in ensuring that all the terms and agreements between the parties are captured in the comprehensive written document. This guards against misunderstandings and reinforces the authenticity of the written terms.
For example, imagine Carter agrees to purchase a house from Dooley, and they both sign a detailed written agreement. Later on, Carter claims that Dooley had orally promised to cover all loan discount points. Given the parol evidence rule, courts would scrutinize the signed contract, and typically they would uphold the written agreement without considering Carter’s oral claims.
However, there are exceptions to the rule, including instances of fraud. If Carter could establish that Dooley used fraudulent means to induce Carter into signing the contract, then the court might consider this oral evidence despite the written agreement.
Common Situations Where Parol Evidence May Be Relevant
Parol evidence can be particularly significant in business transactions where large sums of money are involved or where the relationships between the parties imply reliance on trust beyond the written agreement. Human memory is fallible; thus, contentious elements often arise when parties hold divergent memories of spoken promises.
Frequently Asked Questions
Q: What is meant by ‘parol evidence’?
A: Parol evidence refers to any oral statements or prior agreements that are not included in a written contract.
Q: When can parol evidence be admitted in court?
A: Parol evidence can be admitted when the written agreement faces allegations of fraud, mistake, or other exceptional instances where justice necessitates it.
Q: Are verbal agreements enforceable?
A: Verbal agreements can be enforceable, but they face significant challenges in proving their validity compared to written contracts. Typically, court systems highly prioritize written agreements.
Q: How does parol evidence protect against misunderstandings?
A: The rule minimizes disputes grounded in misremembered, strained, or fabricated promises, emphasizing the written contract as the true repository of the agreement.
Related Terms: Contract Law, Written Agreement, Oral Agreements, Legal Testimony.
