The parol evidence rule is a rule in common law jurisdictions limiting the kinds of evidence parties to a contract dispute can introduce when trying to determine the specific terms of a contract and precluding parties who have reduced their agreement to a final written document from later introducing other evidence, such as the content of oral discussions from earlier in the negotiation process, as evidence of a different intent as to the terms of the contract. The rule provides that "extrinsic evidence is inadmissible to vary a written contract". The term "parol" derives from the Anglo-Norman French parol or parole, meaning "word of mouth" or "oral", and in medieval times referred to oral pleadings in a court case. The rule's origins lie in English contract law, but it has been adopted in other common law jurisdictions; however there are now some differences between application of the rule in different jurisdictions. For instance, in the US, a common misconception is that it is a rule of evidence (like the Federal Rules of Evidence), but that is not the case; whereas in England it is indeed a rule of evidence. The supporting rationale for excluding the content of verbal agreements from written contracts is that since the contracting parties have agreed to reduce their contract to a single and final writing, extrinsic evidence of past agreements or terms should not be considered when interpreting that writing, as the parties ultimately decided to leave them out of the contract. In other words, one may not use evidence made prior to the written contract to contradict the writing.
Overview The rule applies to statements made orally, and to other extrinsic evidence (such as written correspondence that does not form a separate contract) regarding a contract. If a contract is in writing and final to at least one term (integrated), parol or extrinsic evidence will generally be excluded. However, there are a number of exceptions to this general rule. These include partially integrated contracts, agreements with separate consideration, in order to resolve ambiguities, or to establish contract defenses. To take an example, Carl agrees in writing to sell Betty a car for $1,000, but later, Betty argues that Carl earlier told her that she would only need to pay Carl $800. The parol evidence rule would generally prevent Betty from testifying to this alleged conversation because the testimony ($800) would directly contradict the written contract's terms ($1,000). The precise extent of the rule varies from jurisdiction to jurisdiction. As a preliminary or threshold issue, the court may first determine if the agreement was in fact totally reduced to a written document or (in US terminology) fully "integrated". In the case of State Rail Authority of New South Wales v Heath Outdoor Pty Ltd McHugh J held that the parol evidence rule has 'no operation until it is first determined' that all the terms of the contract are in writing. This threshold question applies even in those jurisdictions that apply a very strong form of the parol evidence rule, called the "Four Corners Rule". Beyond that, the exceptions to the parol evidence rule vary between jurisdictions. Examples of circumstances where extrinsic evidence may be admissible in different jurisdictions include:
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