PAROL EVIDENCE AND INTERPRETATION

1. Summary of rule: In summary, the parol evidence rule provides that evidence of prior agreement:

• may never be admitted to contradict an integrated writing, and
• may furthermore not even supplement an integration that is intended to be complete.

See Rest. 2d, § 213.

Example: Seller and Buyer make an oral agreement for the sale of the Ardsley Acres Hotel, together with all the furniture in the hotel. They reach oral agreement as to the purchase price of the hotel, and also agree that Buyer shall have one year in which to complete payment of this price. The parties then employ a lawyer to prepare a written contract. He does so, and they sign it. It does not mention furniture, or make any reference to personal property. It also provides that Buyer shall only have six months in which to complete payment.

  If Seller can show that the written contract was intended as the final expression of the parties’ agreement (i.e., that it is an integration), Buyer will not be allowed to show that the original oral agreement gave him a year, rather than six months, to pay. He would not be allowed to show this because of the rule that prior oral or written evidence may not be introduced to contradict an integrated writing.

  If Seller can also show that the written agreement was intended to be a complete or total integration (i.e., that it contained all the terms on which the parties were finally in agreement), Buyer would not be allowed to prove that hotel furniture was to be included in the deal. This is because the oral agreement as to furniture would be a consistent additional term, and may not be introduced to supplement a total integration. If, on the other hand, Seller is unable to show that there is a total integration (as might be the case if the writing contains a statement that it deals only with the hotel real estate, and leaves untouched any oral agreement as to personal property that the parties might have reached), Buyer will be able to introduce evidence that the parties agreed to include the furniture. See Rest. 2d, § 213, Illustration 4.

Note: Observe that the parol evidence rule protects the sanctity of final written documents, even at the expense of fulfilling the parties’ actual intentions. Thus in the above example, once Seller is able to show that the written document was intended to be a total integration, the court must ignore all evidence by Buyer that furniture was included in the deal, even if this evidence would show absolutely conclusively that the parties did intend to include the furniture. However, the force of this rule is somewhat dissipated by the fact that, as it is discussed below, the judge, in determining whether the writing is an integration, and whether it is partial or complete, may consider all evidence.

D. Contemporaneous and subsequent expressions: Thus far, we have spoken only of oral or written expressions that occur prior to a written integration. If an oral agreement occurs at the same time as the writing is signed, most courts treat it as they would treat a prior oral statement, i.e., precluding it from being introduced to contradict the writing, or to supplement the writing if it is a total integration.