Parol evidence rule

The parol evidence rule is a common law rule in contract that prevents a party to a written contract from presenting extrinsic evidence (usually oral) supplementary to a pre-existing written instrument.

The purpose of the parol evidence rule is to prevent parties from deceptively incorporating terms that were not specifically agreed to into a contract, to the detriment of other parties to the contract.

The parol evidence rule is considered as operating in two parts: identification, and construction.

  • Identification prevents extrinsic evidence adding to, varying, or contradicting the terms of the contract contained in the document.
  • Construction limits the use of extrinsic evidence which may be used to explain the meaning of the terms of the contract contained in the document.

The parol evidence rule will only operate in identification where the primary agreement is in writing, and that written agreement constitutes the entirety of what has been agreed upon by the parties (i.e. the agreement was intended to be wholly in writing). For the purposes of determining whether or not the agreement was wholly in writing, the Court is permitted to look to the extrinsic evidence. The parol evidence rule does not apply to collateral contracts or in cases of estoppel.

The parol evidence will apply in construction except where the court is seeking to resolve an ambiguity specifically.