Prior to January 1st, 2014, the law forbade extrinsic evidence from changing the terms of a written contract. The parol evidence rule states that a court will not contemplate any evidence beyond the four corners of a written contract to change the terms of that contract. The rule previously applied only to contracts, deeds, and wills; it now applies to trust instruments.
The parol evidence rule stipulates that the terms stated in a writing that is intended by the parties to be the final version of their agreement, may not be opposed by evidence of any previous agreement or contemporaneous oral agreement. The rule also states that the terms mentioned in the writing may be explained or complemented by evidence of consistent additional terms unless the writing is also intended to be a complete and only statement of the terms of the agreement.
In addition, the rule mandates that the court decide whether the writing is intended by the parties to be a final version of their agreement regarding the terms that are included and whether the writing is intended to be the only statement of the agreement’s terms. However, there may be certain situations in which evidence is included, such as evidence of a mistake or flaw in the writing, or where the legality of the agreement is debatable. Under the law, an agreement includes deeds, wills, and contracts between parties; it now includes trust instruments.
What Are the Implications of the New Law?
The addition of trust instruments to the list of agreements affected by the parol evidence rule will help clarify the law with respect to probate and trust litigation. It will also lessen the cost of litigation and expenses in that it will dissuade parties from contesting the application of the parol evidence rule to trust instruments.
Contact author Roxanne Minott by visiting Alain Pinel Realtors.