The parol evidence rule might seem a little bit intimidating to some students, but with some practice it’s actually relatively straightforward.
What is the Parol Evidence Rule?
The parol evidence rule is about whether the parties to a written contract can bring in outside evidence of matters discussed prior to or during the time the parties entered into the contract.
Thus in a sense, as the name suggests, parol evidence questions are similar to Evidence questions: we are simply trying to determine whether a piece of evidence is admissible.
Note: Just as with an Evidence question, we are not concerned with which side will actually prevail in the end. We are only concerned with whether a piece of evidence that one side wants to bring in is admissible for the court to hear. With that in mind, let’s tackle what this rule is all about.
Complete Integration versus Partial Integration
A final written agreement is either what’s called a complete integration, or what’s called a partial integration.
Complete (or Final) Integration:
A contract is usually a complete integration if it contains a merger clause, which is a written statement in the contract stating that the contract is the complete agreement between the parties. A contract is also a complete integration if it contains other language indicating that it is a complete integration, or the court concludes that it is a complete integration.
If the written agreement is a complete integration:
- Outside evidence that contradicts the terms of the agreement is not admissible.
- Outside evidence of additional terms that add to the contract or supplement the contract is not admissible.
- Outside evidence that merely explains part of the agreement or clarifies an ambiguity in the agreement is admissible.
Partial Integration
If there is no merger clause or other language indicating that the contract is a complete integration, then the contract is a partial integration.
If the agreement is a partial integration:
- Outside evidence that contradicts the terms of the contract is not admissible (just as with a complete integration).
- Outside evidence that merely explains part of the agreement or clarifies an ambiguity in the agreement is admissible (just as with a complete integration).
- Outside evidence of additional terms that add to the contract or supplement the contract, but do not contradict the terms of the contract, is admissible. This is a key difference between a complete integration and a partial integration.
Examples
Now let’s take a look at some examples to see how these ideas play out:
Example 1: I enter into a final written agreement (that includes a merger clause) to purchase a small studio apartment. I want to bring in evidence that shows that prior to the signing of the final agreement I was promised a mansion featuring an Olympic pool and a basketball court, rather than the small studio apartment. Is this evidence admissible? NO. This evidence involves a completely different type of home, and therefore directly contradicts the terms of the written agreement. It actually does not matter whether the contract is a complete or partial integration because the outside evidence contradicts the terms of the contract, and that is never allowed.
Example 2: I enter into a final written agreement (that includes a merger clause) with a furniture company to purchase a couch. Our agreement states that I am to pay $300, and I will receive a “medium-size” couch. The final agreement makes no mention of the actual, specific length of the couch. I have evidence that while I was negotiating the contract with the furniture company, we agreed that a “medium-size” couch means a couch eight feet in length. Will this evidence be admissible? YES. This evidence is merely explaining a term of the contract. It is clarifying an ambiguity in the contract (how long a “medium-size” couch actually is). This evidence does not involve adding any additional terms to the contract, and it does not contradict the contract. Once again it does not matter whether the contract is a complete or partial integration because outside evidence that merely explains or clarifies an ambiguity is always allowed.
Example 3: I enter into a written agreement with Dick’s Sporting Goods to purchase a weightlifting bench. The agreement states that Dick’s Sporting Goods will deliver the weightlifting bench to my residence. I have evidence that prior to signing the final agreement, Dick’s Sporting Goods told me that its deliverymen would also assemble the weightlifting bench in my basement. HERE it matters whether the contract is a complete integration or a partial integration. I am not clarifying an ambiguity already in the contract ( this is always allowed), nor am I attempting to introduce evidence that contradicts the terms of the contract (this is never allowed). Rather, I am attempting to introduce evidence of an additional term that does not contradict the final written contract. This is NOT admissible if our final written agreement is a complete integration, but it IS admissible if our final written agreement is a partial integration.
What To Understand
- Parol evidence is outside evidence of matters discussed prior to or during the time the parties entered into a contract.
- A final written agreement is usually a complete integration if it contains a merger clause or other language indicating it’s a complete integration. Otherwise it’s a partial integration.
- When you encounter a parol evidence question on the MBE, it might not actually make a difference whether the contract is a complete or partial integration.
- Parol evidence that contradicts the terms of the final written written agreement is never allowed. It makes no difference whether the contract is a complete integration or a partial integration.
- Parol evidence that merely explains (clarifies any ambiguities) the terms of the final written agreement is always allowed. Once again it makes no difference whether the contract is a complete or partial integration.
- When outside evidence of additional terms supplements or adds to the contract, but does not contradict the terms of the contract, THIS is when it matters whether the contract is a complete integration or a partial integration. If the contract is a complete integration this evidence is not admissible, but if the contract if a partial integration this evidence is admissible.
Please feel free, as always, to leave a comment if you have any thoughts or questions, and best of luck 🙂