Contracts

Tentative terms discussed in preliminary negotiations are subsumed by the provisions of the contract executed by the parties. The PAROL EVIDENCE rule governs the admissibility of evidence other than the actual agreement when a dispute arises over a written contract. When parties memorialize their agreements in writing, all prior oral and written agreements, and all contemporaneous oral agreements, merge in the writing, which is also known as an integration. The written contract may not be modified, altered, or varied by parol or oral evidence, provided that it has been legally executed by a person who intends for it to represent the final and complete expression of his or her understanding of the contract. This is not the case, however, where there has been some mistake or fraud in the drafting of the document.

The parol evidence rule effectuates the presumed intention of the parties; achieves certainty and finality as to the rights and duties of the contracting parties; and prevents fraudulent and perjured claims. It has no application to subsequent oral contracts that modify or discharge the written contract, however.