Make Sure It’s in the Contract: NY’s Parol Evidence Rule

contract-image1A good contract is comprehensive. When drafting a contract, everything discussed and agreed upon should be included in the physical document. Do not rely on contract negotiations, comments, conversations, or notes taken during the contract’s preparation or signing. If part of your agreement isn’t featured within the contract, even if it was agreed upon verbally or in the context of an email, it may not hold up in court because of NewYork’s Parol Evidence Rule.

Should litigation occur, courts will generally look to “the four corners” of the document. This is known as the parol evidence rule. This rule excludes outside writings, those that are not part of the document and may contradict what is stated, from being presented in court.

While communications occurring outside of the contract are typically not considered in court, some exceptions do apply. The courts will allow “outside” evidence if:

  • it helps the judge or jury interpret terms stated in the contract.
  • it shows that the contract is ambiguous.
  • it shows that the contract does not apply.
  • it shows that part of the contract is invalid due to a transcription mistake. (However, since technology can easily make accurate copies, this reason is less accepted.)
  • it corrects a mistake.
  • it shows that fraud, duress, unconscionable behavior, or tortious interference with contract occurred.
  • it shows that consideration was never paid.
  • it identifies the parties. (This is applicable in the case that one or both parties have changed names via marriage, corporate merger, or other legal means.)
  • it makes changes in the contract after the final written contract has been agreed to. This applies only to contracts that have a clause allowing for oral changes.

Make sure the terms of your contract are clear and provide for relief in the event of a fee dispute. Do not rely on a promise that is not included in the four corners of the document as New York’s Law will generally not allow it because of the Parol Evidence Rule.

If you have questions about the enforceability of a contract, contact FFGN.  We have the experience that pays…….