Parol Evidence Rule is not an evidence rule, but one of contract law. Under Parol evidence rule, extrinsic evidence may
not be used to modify or supplement a written contract.
Ex: Molly signed a lease contract to rent an apartment for 1k per month, she may not provide extrinsic evidence
that the leasing office previously agreed to rent her the apartment for $800
The rationale behind the parol evidence rule is that the paties to an agreement will include all of their terms in a written
contract, so any terms that are not in the written contract were not intended to be part of the final agreement.
The common law parol-evidence rule provides
that courts may not consider evidence of prior or contemporaneous oral or written agreements (or other evidence
outside the four corners of the contract) to vary or contradict the unambiguous terms of an integrated agreement
An agreement is integrated insofar as it:
(1) consists of a writing or series of related writings forming one transaction and
(2) embodies the final expression of the party’s intent concerning the contract’s subject matter
 A completely integrated agreement is the full and final expression of the party’s intent regarding the contract’s
subject matter. PE rule excludes extrinsic evidence of prior or contemporaneous oral or written agreements or
negotiations that are within the scope of the completely integrated agreements. In other words, the court may
not use extrinsic evidence to contradict or supplement (add to) the contract.
o (2) A binding completely integrated agreement discharges prior agreements to the extent that they are
within its scope.
o “Completely Integrated”: The parties intended the document to completely cover every aspect of the
transaction, even issues that it does not address.
 A partially integrated agreement is a final but incomplete statement of the party’s intent regarding the
contract’s subject matter. PE rule excludes extrinsic evidence of prior or contemporaneous agreements or
negotiations that are inconsistent with the partially integrated agreements. In other words, the court may use
extrinsic evidence to add terms to the contract but not to contradict it.
o “Partially Integrated”: The parties intended the document to be the final word on the topics that it
covers.
o (1) A binding [partially] integrated agreement discharges prior agreements to the extent that it is
inconsistent with them.
When extrinsic evidence is allowed:
A. Extrinsic evidence may be used to establish whether a written contract is an integrated agreement as well as
whether an integrated agreement is complete or only partially integrated.
o Ex: Molly may testify that the lease contract was not integrated, or that the contract is only a partial
integration.
B. extrinsic evidence may be used to clarify the meaning of an ambiguous term.
o Ex: if Molly’s lease says “insurance” she can use evidence to show it meant “rental insurance”
C. extrinsic evidence may be used to support a defense to enforceability such as illegality
o Ex: if the leasing office previously agreed to lease Molly an apartment for the purpose of storing stolen
goods
D. extrinsic evidence may be used to determine whether a remedy should be granted or denied to one of the
parties
Parol Evidence Rule: Three Step Analysis
1. Is the written contract completely integrated?
 If so, then prior or contemporaneous agreements related to the subject matter of the transaction cannot be
admitted
2.
Is the written contract partially integrated?
 If so, then prior or contemporaneous agreements cannot be admitted that contradict the writing
3. Even if the contract is integrated, is the prior or contemporaneous agreement a “collateral agreement”?
 In other words, is it a separate contract and therefore not barred by the parol evidence rule?
Mitchill v. Lath: Collateral Agreements
What are the three requirements to show that a previous or contemporaneous agreement is a collateral agreement?
(i.e., a completely separate contract that is not barred by the parol evidence rule)?



Collateral in form
Does not contradict the main agreement
Addresses an issue that one would not expect the parties to put into the main
UCC Parol Evidence Rule (§ 2-202)
“Terms with respect to which the confirmatory memoranda of the parties agree or which are otherwise set forth in a
writing intended by the parties as a final expression of their agreement with respect to such terms as are included
therein may not be contradicted by evidence of any prior agreement or a
contemporaneous oral agreement but may be explained or supplemented… (b) by evidence of consistent additional
terms unless the court finds the writing to have been intended also as a complete and exclusive statement of the terms
of
the agreement.”
Under the UCC 2-202 Parol Evidence Rule if (1) the parties writings agree on a particular term or (2) the term is set forth
in a writing that the parties intend to be their agreement’s final expression concerning the terms in the writing, then
evidence of any prior agreement or any contemporaneous oral agreement is inadmissible to contradict the term.
However, specific evidence is admissible to explain or supplement the term, namely (1) course of performance (2) course
of dealing (3) usage of trade (4) evidence of consistent additional terms, unless the court finds the agreement is
completely integrated.
question 1 of 22 - did not fully understand rule
I saw that "the writing contained the complete and exclusive statement of the parties’ agreement" and assumed
because the written agreement did not mention the discount that evidence of the 5% discount as a term of the
agreement would not be allowed based on the parol evidence rule.. However, Under the UCC evidence of course of
dealing is admission even if the writing contains the complete and exclusive agreement of the parties i.e. whether or not
it is fully integrated or partially so long as it does not contradict the terms. Under the UCC the following evidence is
allowed to explain or supplement terms

course of performance - sequence of contract that is relevant to understanding the agreement between the
parties - can show repeated occasions for performance and/or the other party accepts performance without
objection

course of dealing - sequence of conduct concerning previous transactions between parties that establishes a
common basis of understanding and interpreting that conduct

trade usage - any practice or method of dealing in the parties’ business or industry that is practiced with enough
regularity to justify an expectation that it will be practiced in the instant case
Express terms still prevail, but otherwise, the hierarchy goes. ExpT > CofP> CofD> TUsage - so long as no
contradiction
Contracts subject to a condition precedent - When the parties orally agree that a written contract is contingent on the
occurrence of an event or some other condition (a condition precedent), the contract is not integrated and the oral
agreement may be introduced. The classic case is that of an inventor who sells in a written contract an interest in his
invention.

Orally, the inventor and the buyer agree that the contract is to take effect only if the buyer’s engineer approves
the invention. (The contract was signed in advance of approval so that the parties would not need to meet
again.) The engineer did not approve it, and in a suit for performance, the court permitted the evidence of the
oral agreement because it showed “that in fact there never was any agreement at all.”Pym v. Campbell, 119 Eng.
Rep. 903 (Q.B. 1856). Note that the oral condition does not contradict a term of the written contract; it negates
it. The parol evidence rule will not permit evidence of an oral agreement that is inconsistent with a written term,
for as to that term the contract is integrated.
Parol Evidence Rule – you do have a written contract; the question is one of intent. Ask did the parties intend for this
document to be exclusive to this written agreement. Parol evidence bars introduction for fully integrated contracts but
you can argue collateral agreements
Fact pattern: always a written document. Person argues that a promise was not fulfilled that was not inside the writing.
Ask, is the contract fully integrated?
Term: integration; partially – only intended the document to the final word on the topics that are covered; but there are
other topics. Whereas completely integrated means that the parties intended to cover every aspect of the transactions,
even issues that it does not address
 Is the contract completely integrated? (everything included?) or did they intend the written document as yes
authoritative to the written agreement but there are other things that are/were promised as long as they don’t
contradict what is written
 Could argue that it was never our intent for this document to be all-inclusive because I never wrote it and also
his intent because he made promises outside of what is written … so the contract was only partially integrated
o And if its partially integrated the court can hear outside evidence
Story pattern: you do have a written contract; one accused of the breach but the breach does not have the promise
written into the contract but that the thing promised was promised at the time the contract was made just orally/into
another writing. The question is, is this a promising part of the contract?
UCC Parol evidence rule 2-202 –
Do the parties intend the contract to be partially integrated or fully integrated?
Ex: you represent a client that a promise is not in the written agreement did they intend to be fully integrated
First thing you argue is they didn’t include it to be fully integrated
Blah de blah
And even if im wrong it could be a collateral agreement ** three-step argument
 Is it collateral in form
o Is the consideration different (at least on one side?)
o Are the parties different? (at least one?)
 Does it contradict the main agreement
 Address an issue that one would not expect the parties to put into the main agreement
o Ex: they’re friends would often not put into a contract or its just different stuff
Argue before agreement would come into effect a condition had to be met… Ex: the contract was signed but was orally
agreed for efficiency that it wouldn’t come into effect. Parol evidence never triggered because the agreement didn’t ever
exist because an oral testimony on the condition never occurred. No rule to prevent oral evidence that there is no
contract
Prior contemporaneous promise –
Intended it not to be a completely integrated contract because it purposely left out the “secret” provision