Parol Evidence Rule
When parties have reduced their agreement to a final, integrated written contract, prior or contemporaneous oral or written statements that contradict or vary the written terms are inadmissible to alter those terms.
Elements / Test
Requirements for rule to apply:
- There is a written contract
- That is integrated — intended by the parties as a final expression of their agreement
- The extrinsic evidence is prior or contemporaneous (subsequent modifications are not barred)
- The evidence would contradict or vary the written terms
Degree of integration determines scope:
- Complete integration: Written contract is the exclusive statement of all terms → bars evidence of prior consistent additional terms as well as contradictory terms
- Partial integration: Final as to terms written, but not intended to be exhaustive → bars contradictory terms but permits additional consistent terms
How to determine integration:
- Williston (four corners): Look only at the document; if complete on its face, presume fully integrated
- Corbin (contextual): Consider all circumstances including the alleged oral agreement itself to determine what parties intended
Exceptions and Edge Cases
Evidence ALWAYS admissible despite parol evidence rule:
- Fraud, duress, misrepresentation in inducing the written contract
- Condition precedent to effectiveness of the contract
- Ambiguity: Context to explain, but not contradict, ambiguous terms
- Collateral agreements: Separate agreement on different subject matter that parties would not ordinarily put in writing
- Course of dealing, course of performance, trade usage (UCC § 2-202): Permitted to supplement or explain, but not contradict, written terms
Integration clauses (“merger clauses”): Strong evidence of complete integration but not conclusive.
Policy Rationale
Writing is more reliable than memory; protects parties from false claims of oral side-agreements; promotes certainty and finality in commercial transactions. Counter: can exclude legitimate context; Corbin approach better captures parties’ actual intent.
Key Cases
| Case | Rule |
|---|---|
| Masterson v. Sine (Cal. 1968) | Corbin approach — collateral oral agreement not excluded when parties likely would not have included it in writing |
| Pacific Gas & Electric Co. v. G.W. Thomas Drayage (Cal. 1968) | Traynor — context always admissible to show whether contract language is reasonably susceptible to offered interpretation |
| Nanakuli Paving & Rock Co. v. Shell Oil Co. (1981) | Trade usage and course of performance can supplement written price protection term |
| Mitchell v. Lath (N.Y. 1928) | Williston four-corners approach; oral agreement to remove icehouse excluded |