Business Law

Introduction

Parol evidence rule is legal rule that once written agreement has been signed by all important parties, then it cannot be add to or any outside evidence which can change written contract. In other words, if there is a written contract between two parties, they can’t give verbal evidence to add extra words to the agreement in any way or to modify the meaning. However, there are ways of exception to the rule that can be allowed by the court. Collateral contract can be argue as one of the exception to the parol evidence rule. This is an argument of a separate contract. The purpose of this essay is to explain about the legal rule which is parol evidence rule and the exception to the rule.

Body

Description of Parol Evidence Rule

Parol evidence rule exist because is to prevent fraud and uncertainty of the contract. The written contract can never be add in or change the terms in it unless it is not clear. This rule only can be allowed when the written contract is incomplete, ambiguous, writing is not a true statement of the agreement of the parties, accident or mistake, and when the existence, subsequent modification or illegally of the contract is hanging. When the written contract is obviously incomplete or the parties themselves admit it is incomplete, therefore the court can allow evidence like oral as what has been agreed to along with the written contract earlier. In this case, there are exceptions of the rules that court must allowed.

First Exception to Parol Evidence Rule and Relevant Case

The first exception is the contract is partly written partly oral. This exception can only comes when the written agreement does not clear to both parties which the express terms were not complete. In Van Den Esschert v Chappell the judge stated that the parol evidence can’t prevent reliance on the assurance because Chappel signed the contract immediately after she asked whether the house was free from white ant infestation. After a while he has been...