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Contracts • Terms of the Contract
K#085
Legal Definition
Yes. The parol evidence rule does not prevent a court from admitting evidence of earlier agreements to resolve ambiguities in the contract.
Plain English Explanation
The purpose of the Parol Evidence Rule is to grant a default-level of respect for the terms of a contract and not allow parties to undermine the terms of the contract using previous negotiations or discussions. After all, if a signed contract exists, it means that the parties ultimately said, "This is what we are agreeing to."
However, courts will not allow the Parol Evidence Rule to prevent a party from showing evidence that helps to clarify the meaning of an ambiguous contract term. Though such evidence would be parol evidence, its purpose would be limited to assist the court in better understanding what was agreed to.
However, courts will not allow the Parol Evidence Rule to prevent a party from showing evidence that helps to clarify the meaning of an ambiguous contract term. Though such evidence would be parol evidence, its purpose would be limited to assist the court in better understanding what was agreed to.
Hypothetical
Hypo 1: Sam owns a taco cart. Every year, Bob hires Sam to cater his birthday party. Every year, Sam and Bob sign a contract where Sam agrees to provide "chicken, beef, and pork taco meats." This year, Sam creates a new contract that just lists "tacos" with no specific information regarding what type of meats. Before signing, Sam asks Bob if he wants the same order as previous years. Bob says "Yes." When Sam shows up to cater the party, he only has fish tacos. Bob sues and wants to introduce evidence of his previous contracts and discussions. Result: The evidence Bob wants to bring in is parol evidence and, generally, parol evidence is inadmissible under the Parol Evidence Rule. However, here, the purpose of introducing the parol evidence is to clarify the ambiguity of what "tacos" means. Bob can show, based on previous discussions and contracts, "tacos" is defined as "chicken, beef, and pork taco meats," not fish tacos. The court would allow this evidence, as it helps clarify what the actual agreement was.
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