Parol evidence means oral or verbal evidence. Parol evidence refers to testimony given by a witness at the time of trial. Parol evidence will bring within its purview both oral and written agreements not incorporated in a final agreement.
The principle behind the parol evidence rule is that the parties to an assignment cannot alter the meaning of a final written agreement by merging prior oral or written agreements with the final written agreement. Usually the rule of parol evidence will not allow testimony of a party to an assignment if the meaning of the words used in the assignment are clear.[i] The testimony of the party will be used only to corroborate the final written agreement.
The parol evidence rule is concerned only with the testimony of the parties to the assignment and their relatives. The testimony of a stranger to an assignment will not come under the purview of the parol evidence rule[ii].
The following conditions need to be met before application of the parol evidence rule:
- the assignment in question must be integrated; and
- the assignment must be a final agreement between the parties in the opinion of the court.
The parol evidence rule is admissible in the following circumstances:
- if testimony of the party to an assignment aids to explain the purpose of the assignment;
- if the intention of the parties and consideration are not fully expressed;[iii]
- if principal debtor who is not a party to the assignment is sued by the assignee;
- if there is any clerical or typographical errors in the written agreement;
- if there is ambiguity in the assignment and the terms of the assignment need to be interpreted;[iv]
- to identify the parties if the parties have changed their name;
- if the assignment was entered under mistake, undue influence, fraud, and duress; or
- if there is another separate agreement between the parties to the assignment.
[i] Graustein v. H. P. Hood & Sons, Inc., 293 Mass. 207 (Mass. 1936)
[ii] Bickerdike v. State, 144 Cal. 681 (Cal. 1904)
[iii] Embassy Realty Associates, Inc. v. Southwest Products Co., 126 Cal. App. 2d 725 (Cal. App. 1954)
[iv] C.E. Hale Corp. v. Butler Polymet, Inc., 869 F.2d 1489 (6th Cir. Mich. 1989)