Also known as:parol evidence · parole evidence rule
Written by attorneys · grounded in primary & secondary sources — see below
A substantive rule of contract law that precludes the introduction of extrinsic evidence to contradict, add to, or vary the terms of a completely integrated written agreement. The rule treats the writing as the final expression of the parties' bargain once the court determines integration as a preliminary question.
Sources & Authorities
How it applies
Common Examples
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Merger Clause Bars Post-Closing Claim
Progressive Healthcare sold an office building to Prime Logistics under a purchase agreement that contained a merger clause declaring the writing the complete agreement. After closing, Prime Logistics discovered that Progressive Healthcare had orally promised to install upgraded fiber lines but never included the promise in the deed. Prime Logistics sued to enforce the oral promise. The court refused to admit the evidence because the merger clause and deed established the final obligations.
Court Decides Integration First
Premier Manufacturing and Prosperity Investments negotiated a supply contract containing detailed price and volume terms plus an integration clause. Prosperity Investments later sought to introduce earlier emails promising a price adjustment if raw-material costs rose. The court first determined that the signed writing was completely integrated and therefore excluded the emails as inconsistent with the fixed-price term.
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Cases
Common Law
Restatements
Casebooks
Hornbooks
Course Outlines
Study Supplements
Dictionaries
Absolute Deed Treated as Mortgage
Paige Porter conveyed her ranch to Pedro Pacheco by an absolute deed while simultaneously signing a side letter stating the deed secured repayment of a loan. After Paige Porter repaid the debt, Pedro Pacheco refused to reconvey. The court admitted the side letter to show the deed was intended only as security and ordered reconveyance.
Stock Sale Contract Integration
Essex Universal Corporation purchased shares from Yates under a written agreement that included a clause transferring board control. Yates later claimed an oral side understanding limited the control transfer. The court held the written clause controlled and excluded the oral evidence under the parol evidence rule.
Essex Universal Corp. v. Yates305 F.2d 572
Franchise Agreement Oral Assurances
Rudzewicz and MacShara signed a Burger King franchise contract containing a merger clause. They later asserted that district-office personnel had orally assured them of easy assignment rights. The court applied the parol evidence rule and merged the alleged assurances into the final written agreement.
Burger King Corp. v. Rudzewicz471 U.S. 462, 474 (1985)
Will Formalities and Extrinsic Statements
A testator executed a formal will leaving property to a named beneficiary. Family members offered prior oral statements that the will was meant only as leverage in negotiations. The court excluded the statements because the executed document constituted the final expression of testamentary intent.
Cruzan by Cruzan v. Director, Missouri Dept, of Health497 U.S. 261, 277 (1990)
Common questions
Frequently Asked
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How does a court decide whether a writing is completely integrated?+
The court makes this determination as a preliminary question by examining the writing's completeness, specificity, and any merger clause. Once the court finds complete integration, prior agreements within the scope of the writing are discharged.
Supporting sources
When may parol evidence still be admitted despite an integration clause?+
Evidence remains admissible to show fraud, mutual mistake, or a collateral agreement that does not contradict the writing. Courts also admit evidence of conditions precedent to formation or to explain ambiguous terms.
Supporting sources
Does the parol evidence rule apply to deeds in real-estate transactions?+
Yes. After closing, the deed becomes the operative document and merger plus the parol evidence rule ordinarily bar enforcement of prior contract promises not restated in the deed, subject to exceptions for fraud or collateral undertakings.
Supporting sources
What is the difference between complete and partial integration?+
A completely integrated agreement is adopted as the exclusive statement of all terms, discharging all prior agreements within its scope. A partially integrated agreement allows supplementation by consistent additional terms but still bars contradictory evidence.
Supporting sources
497 U.S. 261, 277 (1990)Constitutional Law
…do not have the consequences that a decision to terminate a person's life does. At common law and by statute in most States, the parol evidence rule prevents the variations of the terms of a written contract by oral testimony. The statute of frauds makes unenforceable oral contracts to leave property by will, and statutes regulating the…