The Contract Law That Comes Before Your Contract is Drafted

by | Dec 13, 2022 | Educational Series

Hello and welcome to our In the Know Legal education series. Today I want to talk to you about a very important aspect of contract law. We teach you what your contract is, what it does, what the language means and how to customize it, as well as important next steps. However, there are a lot of things that happen before you enter into a contract and we want to talk about some of that with you. The concept I will be discussing has a name and it is called “Parol Evidence.”

Now, you may be wondering why am I talking to you about anything having to do with parol?

What Is Parol Evidence

Parol is a french word that literally means “word” or “speech”, while originally referred to verbal speech, in the medieval times they used the word parol to refer to legal pleadings. So it actually refers to both verbal  and written correspondence. Here we use it to relate words outside an agreement.The parol evidence rule limits the extent to which discussions or writings made prior to or contemporaneous with the signed written contract can be admitted and considered part of the signed written agreement.

Signed Written Agreement

A totally integrated contract is one that is considered to be a final expression of the writing and is something that is intended to include all the details of the agreement between the parties. It is not, for example,  a proposal you send out to your clients or general email discussions. So all the stuff you say prior to or contemporaneous with signing that totally integrated agreement or contract cannot come in to contradict or supplement any of the terms in the agreement.

Let’s say I agree I’m going to make a custom made chocolate cake for you and deliver it to you on march 1st.  You’re going to pay me $50 for the cake. Let’s now say I deliver the cake and you don’t pay me (I wouldn’t pay me either because I cannot make chocolate cake but that is beside the point). So now I not only demand my $50 but also a $25 late fee since you didn’t pay me on time. But if my contract said nothing about a late fee, then any evidence of that late fee that came up prior to or contemporaneous with the signing of the agreement is parol evidence. We may have chatted about a late fee over email, but it wasn’t in the agreement.

Another Service Context

What if in our negotiations I say, “Hey, don’t worry you can call me anytime, text me, or whatever between our sessions.” But the contract says  there will be absolutely no communication between service provider and client between sessions. Well if that is the final contract, it erases everything that was said before and you won’t be able to bring in evidence of that prior discussion of your being able to contact me. The theory is if you wanted this as part of your agreement, it should be in the agreement.

Now, there are some exceptions. If there is an actual defect in the contract. You can bring in evidence of that defect;  or if the contract does not take effect unless some condition is met, you can bring in evidence of that condition. For example, I will only buy a birthday cake from your store on Saturday if you have the chocolate cake delivered that day. Those prior  discussions can come in. Why? Because while we don’t want anything  to change in the existence of the agreement, we will allow the evidence to show that the agreement itself would not exist without the satisfaction of the condition.

What If You Are Duped?

If I duped you into signing a contract with language that I hid, that is fraud. But for my duping you,  you would not have entered into that contract. Defenses to contracts include duress, fraud, mistake, illegality, or conditions. That can come in to show that the contract would never have been entered into.

What About Things You Say/Write After You Enter Into a Contract?

Do not get parol evidence confused with stuff you write or say after you enter into a contract. That is different and that is called a “modification” (which is in fact  represented by one of our templates as an “Amendment to a Service Agreement.” Modifications are allowed and that is when circumstances change, such as a change to the scope of services. This happens all the time and is normal, but you just want to make sure it is clearly spelled out whether you require the modification to be in writing and whether both parties have to agree to it.

So, there is a little contract law to help you understand the before and after of your contract. I hope enjoyed this education series and that you feel a little bit more In the Know.

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