Parol Evidence Rule: Definition and Merger Clause
Parol Evidence Rule applies when in a two-party integration, there is a full implementation of the contract. Extemporaneous discussions, oral agreements and previous contracts are not a part of the evidence rule. This implies that clauses outside the written contract are not allowed to be performed by any of the party involved in the contract. All these are evidence which is separated from the signed contract and are known as Parol Evidence.
Many people confuse the two words, parol and parole. Parol is agreeing with a statement transmitted orally. On the other hand, a prisoner’s temporary release before completing the maximum sentence period is parole.
Another name of the evidence rule
Parol evidence rule is also known as four corners rule. The name has been given due to the four corners of a paper which are used as symbols representing the written contract’s inhibitions. Everything written in the paper or all the evidence are admissible in the court.
What is a merger clause?
Changes cannot be made in the contract when the two parties have entered into a final agreement. No information cannot be altered in the paper. This is the best way to complete the contract document they have signed. Moreover, a sense of agreement generates from the clause. In this way, an agreement is fully expressed.
The best benefit of the merger clause in a contract is it let two parties hold the contract in court over the side agreement even if they want to introduce some changes that, with time, modify the written contract.
For example, there is a deal in the contract that one party will deliver good quality content to the other on December 15. But after some days, they decided that there is no need to get the content until December 20. The latter case will not be addressed in the court. If the contract contains the merger clause in it, then there are no chances of validating the point in the court.
Understand the concept with an example
A contract is signed regarding the sale of laptops between two individuals. As per the content of the contract, Aahron will pay $3,000 for the laptops to Brandon by January 10. Brandon allows Aahron to use the laptop on January 1 due to the faith and believe that Aahron will hold the contract and pay him the amount.
But what happens next is that Aahron neither calls Brandon nor pay him the amount. This continues for weeks. In reaction to this, Brandon decided to sue him for a breach of contract.
In the context of clarification, Aahron claims that he has sent a message to another party and told it about his inability to pay the amount until May. Also, he has responded in the agreement. But due to the content of the contract and the inclusion of the merger clause in it, Aahron does not hold any weight in his explanation. Therefore, Brandon is likely to win the case and Aahron will be asked to pay what he is supposed to or even more.
How Parol Evidence Rule works?
It is such a rule which hold all the parties to the terms no matter there is any separate conversations or agreements.
Effects of Parol Evidence Rule
- Due to the strict implementation of the clauses of the contract, the companies have started taking the contract seriously.
- Careful writing every line of the contract is another benefit of the execution of the contract.
- Ignoring contract requirements are prevented