Parties to contracts frequently argue over contract terms and the intent behind certain provisions of
a contract. However, if the matter goes to court, these arguments can become meaningless if the contract is clear because of the parol evidence rule. A recent appellate court case, Connecticut Bank and Trust Co. v. Munsill-Borden Mansion, LLC, serves to highlight how the rule could impact the evidence in a breach of contract case at trial in Connecticut.
In the CT Bank and Trust case, the parties were arguing over whether an individual had personally guaranteed a promissory note. The individual’s attorney wanted to ask a witness questions concerning the intent behind signing the note. However, the trial judge sustained objections to all of the questions that strayed from the actual note. The reason cited was the parol evidence rule.
In summary, the parol evidence rule prohibits the use of extrinsic evidence (off the contract) to vary or contradict the terms of an integrated (complete) contract. There are exceptions. Exceptions include evidence to explain ambiguity, prove a collateral oral agreement that does not vary the contract, add a missing term that does not set forth the complete agreement, or to show mistake or fraud.
In this case, application of the rule barred all of the questions that were not related to the note itself. Therefore, any arguments over terms or intent were irrelevant. Simply put, the parties were confined to the contract itself.
The take away here is to make sure any specific terms you want in a contract are reduced to writing in the contract, and not in a separate document or conversation. For example, emails or verbal agreements that alter the terms of a clear and integrated contract may become irrelevant and unenforceable in court.