What is the parol evidence rule?
The parol evidence rule is a legal principle used in California business transaction law that prevents parties to an agreement from introducing evidence that contradicts the written terms of the agreement. The rule applies only to written agreements, not to agreements that are oral or implied. The parol evidence rule is designed to avoid disputes between the parties, as it limits the cases in which one party can try to prove that the written agreement does not reflect the actual arrangement. The parol evidence rule has an important exception, which allows for proof of fraud by a party seeking to rescind an agreement. In such a situation, the parol evidence rule may be overridden to allow evidence of fraud. For example, if one party had deliberately misrepresented the terms of the agreement in order to induce the other party to enter into it, then the victim of the fraud may be allowed to introduce evidence to prove the misrepresentation and invalidate the agreement. In addition, the parol evidence rule does not apply to certain types of contract modifications. For example, if a contract is modified in the presence of both parties, then the new modification may be allowed as evidence even if it contradicts the written terms of the agreement. However, if the modification is done in writing, then the parol evidence rule would apply and the modification would not be allowed as evidence.
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