Parol Evidence

Evidence of what was discussed or negotiated that is outside of a written contract is called parol evidence. In a dispute, parol evidence is generally excluded from consideration. The point during the dispute is to hold the parties accountable to what they actually intended in the written contract. However, if the terms in the contract are ambiguous, i.e., the terms are capable of being reasonably interpreted in more than one way, a court or arbitrator may consider parol evidence to figure out what was intended by the ambiguous term. But even then, the parol evidence will only be considered as a part of determining what the parties actually intended the ambiguous term to mean when they made the written agreement.

Practice Tip: Always make sure that the written contract actually states what you intended and is not contradictory to what you intended. It is one thing for the sales representative to tell you how the interaction will work, and for the contract provided afterward to specify the interaction will in fact work that way. Even if the sales representative says one thing, if the executed contract says something different, the contract will govern.

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