Parol Evidence
The parol evidence rule controls when earlier or outside statements can be brought in against a written record.
11. Parol Evidence
The parol evidence rule prohibits the admission of “parol evidence” to contradict or supplement the terms of certain records (written agreements or agreements stored in an electronic or other medium).
- The term “parol evidence” includes prior written agreements or records, prior oral agreements, and contemporaneous oral agreements. Written agreements or records that are executed contemporaneously are not considered parol evidence. Nor is evidence establishing a course of performance, course of dealing, or usage of trade.
- The parol evidence rule distinguishes between integrated agreements and completely integrated agreements.
- An integrated agreement is a record the parties adopt as an expression of the terms contained in the record but may not include all terms of the agreement.
- The parol evidence rule allows parties to supplement the terms of an integrated agreement with additional terms, but it does not allow them to contradict the terms of the integrated agreement.
- A completely integrated agreement is a record that the parties adopt as the complete and exclusive statement of the terms of their agreement.
- Parties often signal this by including a clause declaring that the record represents the parties’ full agreement (a “merger clause”).
- Parties may not use parol evidence either to contradict or to supplement the terms of a completely integrated agreement.
- The parol evidence rule only bars parol evidence under the circumstances described above. In other circumstances, parol evidence is admissible:
- The parol evidence rule allows admission of extrinsic evidence related to a defense, including the defenses discussed above (misrepresentation and mistake).
- It also allows extrinsic evidence to show that no contract was entered because there was no assent.
- Parol evidence is admissible to explain an unclear or ambiguous contract term.
- Some courts may also permit parol evidence to be used to show that a term is unclear or ambiguous. But if a court applies the plain meaning rule described in concept 10, parol evidence (like other extrinsic evidence) is not admissible to explain the meaning of a term that is clear and unambiguous.
- Evidence establishing a course of performance, course of dealing, or usage of trade is always admissible to explain the meaning of contract terms or to supplement the contract terms.
- Both the UCC and common law recognize the parol evidence rule. The basic rules are the same although the terminology differs.
The parol evidence rule turns on how complete the writing is: an integrated agreement blocks only contradiction, while a completely integrated agreement blocks both contradiction and supplementation. The rule is recognized by both the UCC and the common law.
The parol evidence rule controls when earlier or outside statements can be brought in against a written record. First, what even counts as parol evidence: prior written agreements or records, prior oral agreements, and contemporaneous oral agreements. Three things are not parol evidence and so are never barred by the rule: a written agreement executed contemporaneously with the record, and evidence of a course of performance, course of dealing, or usage of trade. Those last three are always admissible to explain or supplement terms.
Next, the rule turns on how complete the writing is, and there are two tiers.
- 1Integrated agreement: a record the parties adopt as an expression of the terms in it, but it may not include all their terms. Parties may supplement with consistent additional terms, but they may not contradict the integrated terms.
- 2Completely integrated agreement: a record the parties adopt as the complete and exclusive statement of their agreement, often signaled by a merger clause declaring the record is their full agreement. Parties may not contradict and may not supplement.
So the difference is one word: an integrated record blocks contradiction only; a completely integrated record blocks contradiction and supplementation both. Finally, the rule has limits. It bars parol evidence only in the situations above. In other circumstances parol evidence comes in: to support a defense, including misrepresentation and mistake; to show no contract was formed because there was no assent; to explain an unclear or ambiguous term; and, in some courts, to show that a term is unclear or ambiguous in the first place (though a plain-meaning court will not use it to explain a term that is clear and unambiguous). And course of performance, dealing, and trade usage are always admissible. The rule is recognized by both the UCC and the common law; the basic rules are the same although the terminology differs.
A merger clause does not bar evidence of a defense like misrepresentation or mistake, or evidence that no contract was formed at all. Even against a completely integrated record, parol evidence still comes in for those purposes.
"Integrated blocks contradiction; completely integrated blocks contradiction and supplementation."
That one-word difference is the whole game.
A merger clause signals complete integration.
Three things are not parol evidence at all: a contemporaneously executed writing, and course of performance / dealing / trade usage (always admissible).
And parol evidence still comes in, even against a complete integration, to prove a defense (misrepresentation, mistake), to show no assent, or to explain an ambiguous term.
Throwaway: a merger clause does not bar evidence of a defense or of no contract at all.
A buyer and a seller sign a record for the sale of equipment. The record contains a merger clause stating it is the complete and exclusive statement of their agreement. The buyer later wants to prove an earlier oral promise that the seller would also provide a year of free maintenance, a term the record says nothing about.
Suppose the record were only integrated, not completely integrated, with no merger clause. Then the buyer could supplement with the consistent additional maintenance term, because an integrated agreement bars only contradiction, not supplementation.
Go back to the complete integration but suppose the buyer instead claims the seller fraudulently misrepresented the equipment to induce the deal. Now the parol evidence comes in anyway, because the rule allows extrinsic evidence to support a defense like misrepresentation, merger clause or not.
An answer that says an ordinary integrated agreement bars both contradiction and supplementation.
An integrated agreement bars only contradiction; consistent supplementation is allowed. Only a completely integrated agreement bars both.An absolute: a merger clause or a signed record bars all extrinsic evidence, or oral promises are never enforceable after signing.
Parol evidence is always admissible to support a defense (misrepresentation, mistake) or to show no assent, and an integrated record may be supplemented.Treating a contemporaneously executed writing, or course-of-performance/dealing/trade-usage evidence, as barred parol evidence.
Those are not parol evidence; course-of-performance, dealing, and trade-usage evidence is always admissible to explain or supplement terms.An answer that lets parol evidence explain a term that is clear and unambiguous in a plain-meaning court.
Parol evidence explains only an unclear or ambiguous term; a plain-meaning court will not use it on a clear term.A correct outcome reached through a wrong reason, for example admitting defense evidence by calling a complete integration freely supplementable.
Name the operative reason: the evidence supports a defense, not that complete integrations can be supplemented (they cannot).there is a signed record, and one party tries to bring in something from before or alongside it, a prior oral promise, a prior writing, a side understanding, often with a merger clause hovering in the facts.
One, is the offered item even parol evidence?
A contemporaneously executed writing and course-of-performance/dealing/trade-usage evidence are not, so they come in.
Two, what tier is the record?
Integrated bars only contradiction; completely integrated (think merger clause) bars contradiction and supplementation.
Three, is the evidence offered for a permitted purpose anyway, a defense like misrepresentation or mistake, to show no assent, or to explain an ambiguous term?
If so, it comes in despite the rule.
Adding an unwritten term to a complete integration is the classic bar; a defense or no-assent showing is the classic escape.
A buyer and a seller signed a record for the sale of a machine that contained a clause declaring the record to be the complete and exclusive statement of their agreement. Before signing, the seller had orally promised to throw in a spare-parts kit, but the record said nothing about spare parts. After delivery, the buyer sought to introduce the prior oral promise to add the spare-parts obligation to the deal.
Will the court most likely admit the prior oral promise to add the spare-parts term?
A contractor and an owner signed a record that they adopted as an expression of their agreement but that did not contain a clause stating it was their complete and exclusive agreement, and it plainly left some matters unaddressed. The contractor sought to introduce a prior oral understanding adding an additional term about cleanup that was consistent with, and did not contradict, anything in the record. The owner objected that nothing outside the signed record could be considered.
Will the court most likely admit the prior oral understanding to add the cleanup term?
A buyer and a seller signed a record for goods that included a clause declaring it the complete and exclusive statement of their agreement. The buyer later sought to introduce evidence that the seller had fraudulently misrepresented a key fact about the goods to induce the buyer to sign. The buyer offered the evidence not to add or change any term, but to establish a defense to enforcement of the contract. The seller argued the merger clause shut out everything said before signing.
Will the court most likely admit the evidence of the seller's misrepresentation?
A wholesaler and a retailer signed a record that they adopted as the complete and exclusive statement of their agreement. A dispute arose over a single term in the record that was genuinely capable of two meanings. The retailer sought to introduce evidence of the parties' course of performance under this very contract to explain which meaning the ambiguous term carried, not to add or contradict any term. The wholesaler objected that the completely integrated record sealed off all outside evidence.
Will the court most likely admit the course-of-performance evidence to explain the ambiguous term?
A buyer and a seller signed a record they adopted as their complete and exclusive agreement. A term in the record was clear and unambiguous as written, and the case arose in a court that follows the plain meaning rule. The buyer nonetheless sought to introduce a prior oral conversation to give that clear term a different meaning, arguing only that the parties had discussed the point before signing.
Will the court most likely admit the prior oral conversation to vary the meaning of the clear term?