Parol Evidence Rule

Evidentiary rule in common law countries (e.g., U.S., U.K., Ireland, Australia, etc.), which, in principle, provides that a court should only consider the “four corners” of a contract to determine its meaning and effect. Parol evidence is such extraneous evidence. The parol evidence rule is not as broad in application as is often presumed.

As it is generally applied in the United States, it prevents the parties to a complete written agreement from introducing evidence of negotiations and understandings prior to or contemporaneous with the written agreement, which vary the terms of, or is inconsistent with the later executed written agreement; parol evidence may be considered that is consistent with a possible interpretation of the agreement.

Under English law, in principle, the rule provides that evidence cannot be admitted (or even if admitted, cannot be used) to add to, vary or contradict a written instrument; i.e., neither party can rely on extrinsic evidence or the terms alleged to have been agreed, that is evidence not contained in the contract. However, under English law parol evidence can be used to establish the matrix of circumstances surrounding the contract, i.e., what the parties’ understanding and intent was when the contract was entered into.

For curious reasons, the word “parol” in parol evidence is frequently italicized in text.

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