Question

Two individuals signed a contract that was intended to be their entire agreement. The Parol Evidence Rule will prevent the admission of evidence offered to:

a) Explain the meaning of an ambiguity in the Contract
b) Establish that fraud had been committed in the formation of the contract.
c) Prove the existence of a contemporaneous oral agreement modifying the contract
d) Prove the existence of a subsequent (after the fact) oral agreement modifying the contract

Answer 1

The Parol Evidence Rule allows evidence to explain ambiguities or establish fraud, but not to prove a contemporaneous oral agreement that modifies the contract. It may allow evidence of a subsequent oral agreement modifying the contract.

Step-by-step explanation:

The Parol Evidence Rule generally prevents the admission of evidence of prior or contemporaneous negotiations and agreements that contradict, modify, or vary the contractual terms of a written contract if that contract is deemed to be the complete and final agreement between the parties. However, there are exceptions to this rule. Specifically, the Parol Evidence Rule will allow evidence to:

• Explain the meaning of an ambiguity in the contract, as the contract’s language may need clarification.
• Establish that fraud had been committed in the formation of the contract, because fraudulent activities invalidate a contract.

Evidence of a contemporaneous oral agreement modifying the contract is generally not admissible under the Parol Evidence Rule, as it would vary or contradict the written agreement. Nevertheless, a subsequent oral agreement that modifies the contract could be admissible, especially if the modification occurs after the original contract was signed and if the parties intended to make the modification binding.