Parol Evidence Rule
What is the Parol Evidence Rule?
The parol evidence rule bars the introduction of prior or contemporaneous agreements that contradict or supplement the terms of a fully integrated written contract.
Definition
The parol evidence rule provides that when parties have reduced their agreement to a final written document intended as the complete and exclusive statement of their terms (a fully integrated agreement), extrinsic evidence of prior or contemporaneous agreements or negotiations may not be used to contradict or supplement that writing. The rule is a substantive rule of contract law, not merely a rule of evidence, and it protects the integrity of written agreements.
The rule operates differently depending on whether the writing is fully integrated or partially integrated. A fully integrated agreement bars all extrinsic evidence that would add to, vary, or contradict its terms. A partially integrated agreement bars evidence that contradicts its terms but permits evidence of consistent additional terms. The threshold question is always the degree of integration, which courts assess by examining the writing itself and the surrounding circumstances.
Important exceptions allow parol evidence to show fraud, duress, mistake, illegality, lack of consideration, conditions precedent to the contract's existence, ambiguity in contract terms, or a subsequent modification. Under the UCC, the parol evidence rule is codified in section 2-202, which permits evidence of course of dealing, usage of trade, and course of performance to explain or supplement even a fully integrated agreement. These exceptions reflect the principle that the rule should protect genuine agreements without enabling sharp dealing.
Key Elements
- 1A written agreement exists between the parties
- 2The writing is intended as a final expression of the parties' agreement (integration)
- 3Determination of whether the integration is partial or complete
- 4The proffered evidence is of a prior or contemporaneous agreement
- 5The evidence would contradict or (for full integration) supplement the written terms
- 6No exception to the rule applies
Landmark Cases
Thompson v. Libby
34 Minn. 374 (1885)
Classic application of the parol evidence rule to exclude oral warranty evidence that contradicted an integrated written sales agreement.
Masterson v. Sine
68 Cal. 2d 222 (1968)
Traynor held that the writing was only partially integrated and allowed parol evidence of an option term, applying a flexible approach to integration.
Mitchell v. Lath
247 N.Y. 377 (1928)
Applied a strict four-corners test for integration, excluding evidence of an oral side agreement about removing an icehouse.
Pacific Gas & Electric Co. v. G.W. Thomas Drayage & Rigging Co.
69 Cal. 2d 33 (1968)
Traynor held that extrinsic evidence is admissible to determine whether contract language is ambiguous, even if it appears clear on its face.
Exam Tips
- Always determine the degree of integration first—partial integration allows consistent additional terms; full integration does not.
- Remember the exceptions: fraud, duress, mistake, conditions precedent, ambiguity, and subsequent modifications are always admissible.
- Under the UCC, course of dealing, usage of trade, and course of performance can always explain or supplement, even with full integration.
- Distinguish between the parol evidence rule (prior/contemporaneous) and the Statute of Frauds (writing requirement)—they serve different purposes.
Common Mistakes to Avoid
- Confusing the parol evidence rule with the Statute of Frauds—the parol evidence rule governs what extrinsic evidence can supplement a writing, not whether a writing is required.
- Forgetting that the rule only applies to prior and contemporaneous evidence; subsequent modifications are not barred.
- Assuming all extrinsic evidence is barred when the agreement is only partially integrated—only contradictory evidence is excluded.
Memory Aid
PER bars PRIOR evidence from REPLACING written terms. Full integration = nothing in or out. Partial = no contradictions, but additions OK.