Monday, August 1, 2011

More Lawyer Lingo: The Parol Evidence Rule - No, not that kind of parole ...


-- Nota bene:  it's not spelled parole - No 'e' at the end

“The parol evidence rule provides that the terms of a written contract cannot be contradicted by evidence of an earlier, inconsistent agreement.” Baroid Equip., Inc. v. Odeco Drilling, Inc., 184 S.W.3d 1, 13 (Tex. App.—Houston [1st Dist.] 2005, pet. denied). The application of the parol evidence rule is a question of law that we review de novo. DeClaire v. G & B McIntosh Family Ltd., 260 S.W.3d 34, 45 (Tex. App.—Houston [1st Dist.] 2008, no pet.). The rule particularly applies when the written contract includes a merger clause or similar language. Baroid Equip., 184 S.W.3d at 13.

We may consider parol evidence, however, “to show want or failure of consideration, and to establish the real consideration given for an instrument.” DeLuca v. Munzel, 673 S.W.2d 373, 376 (Tex. App.—Houston [1st Dist.] 1984, writ ref’d n.r.e.). See also RESTATEMENT (SECOND) OF CONTRACTS §§ 213 cmt. d, 214(d) (1981). We may consider parol evidence to determine if consideration exists “even though the parties have reduced their agreement to a writing which appears to be a completely integrated agreement.” RESTATEMENT (SECOND) OF CONTRACTS § 218(2).

We may also consider parol evidence to determine whether the parties intended a written agreement as a memorialization of their agreement (and therefore only had one contract) or a modification of the prior oral contract (and therefore had two contracts, each of which needed independent consideration as discussed below). See id. at § 210(3) (“Whether an agreement is completely or partially integrated is to be determined by the court as a question preliminary to determination of a question of interpretation or to application of the parol evidence rule.”); Mark K. Glasser & Keith A. Rowley, On Parol: The Construction and Interpretation of Written Agreements and the Role of Extrinsic Evidence in Contract Litigation, 49 BAYLOR L. REV. 657, 705–707 (1997).

SOURCE: Houston Court of Appeals - 01-10-00489-CV - 7/28/11

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