Sunday, April 15, 2012

Parole Evidence Rule

The Parole Evidence Rule appears often on the MBE. This post will discuss when the rule applies, as well as when you should not apply the rule.

The rule is implicated when one party to a contract wants to offer into evidence prior or contemporaneous oral agreements that were not set forth in the contract. The first step is to determine whether the contract, as written, was intended as a final expression of the parties' agreement. If so, generally, the rule will apply, and those oral agreements will not be admitted if they contradict the contract, as written.

The MBE is not, for the most part, a test of general principles. Though you need to know the above rule, it's extremely important to understand the exceptions, as well as the exceptions to the exceptions, when applicable, for each general principle that you learn.

First, although oral agreements (prior to or contemporaneous with) the contract can not be offered to contradict the contract, those same agreements can be offered to explain or supplement the contract. If you're dealing with a UCC question, the terms that will often come in for this purpose are consistent additional terms (no problem there because the terms do not contradict the contract), terms that explain the usage of trade that relates to the parties' contract, and previous course of performance between the parties.

Under the common law (as opposed to the UCC) you'll want to keep in mind that evidence of formation defects (for example, mistake, duress, etc) is admissible, even if that evidence contradicts the contract, as written. In addition, if the parties orally agree to a condition precedent, evidence of that condition precedent will not be kept out by the Parole Evidence Rule. If a term within the contract is ambiguous, and there is evidence that might clear up that ambiguity (for example, evidence reflecting the intent of the parties), the Parole Evidence Rule will not apply to keep that evidence out, either.

Finally, knowing the general rule will allow you to pick up on some of the exceptions. The general rule as stated above applies only to prior or contemporaneous oral agreements that contradict the writing. Therefore, if the offered evidence does not contradict the writing, or if the evidence being offered is a subsequent modification of the contract as written, do not apply the Parole Evidence Rule.



3 comments:

  1. What is parole evidence? Don't you mean parol evidence, as in contract law?

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  2. It's a rule of evidence, but because it often involves whether evidence of a contract should be admitted into court, it's also tested in Contracts.

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  3. Good stuff Sean, thanks so much!

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