The Virginia Business Litigation Blog
Virginia’s parol evidence rule prohibits the use of prior or contemporaneous oral statements or agreements to contradict, modify, or supplement the terms of a written contract that is intended to be a complete and final representation of the parties’ agreement. The rule is designed to protect the integrity of written contracts. It’s based on the premise that when parties have entered into a written agreement, the document itself is the best evidence of the terms of the agreement and the mutual intent of the parties. The parol evidence rule ensures the stability, predictability, and enforceability of finalized written instruments by excluding evidence of the parties’ intent not expressed in the written contract. Memories fade and people lie. Contracting parties need to be able to rely on the written agreement without the prospect of the other party having the ability to claim that certain verbal modifications or additions were made to it.
The parol evidence rule requires a court to construe a document according to its plain terms if it is clear and unambiguous on its face. In such a case, the court will not look for meaning beyond the instrument itself. (See Ott v. L & J Holdings, LLC, 275 Va. 182, 187 (2008)). The rule doesn’t always result in the exclusion of extrinsic evidence, however. There are times when a court may need to consider parol evidence to determine the intent of the parties, such as when the written contract is ambiguous, where it may be subject to a condition precedent, or where the contract was induced by fraud, mistake, or duress. (See Price v. Taylor, 251 Va. 82, 86–87 (1996); Jones v. Franklin, 160 Va. 266, 270 (1933)).
A couple of recent decisions from the Virginia Court of Appeals examined the parol evidence rule and demonstrate how the rule can be applied.
In Joplin v. Harris, decided about a month ago, Joplin sued Harris for $300,000 for personal injuries sustained in a car crash. The defendant’s insurance carrier offered to settle the case for $25,000 and sent the plaintiff’s lawyer a release agreement. The case languished for a few years before another attorney at the firm sent the insurer what appeared to be a signed release, but it was illegible. The court wasn’t able to read the signed document, so it allowed evidence of the original, unsigned release as evidence of what the signed document actually said. The trial court then concluded the release precluded the lawsuit and dismissed the case. On appeal, the Court of Appeals reversed, not because the trial court applied the parol evidence rule incorrectly but because the evidence was insufficient to show the original (unsigned) release and the illegible (signed) release were the same document. “The unexecuted release did not violate the general rule against parol evidence,” the 
court observed, “because it was not offered to alter or contradict any part of the illegible document.”
In the case of Integrated Composite Constr. Sys. v. Premier UHPC, also decided last month, the contract at issue was between a manufacturer and distributor of ultra high-performance concrete. The distributor sued for breach of contract, claiming the manufacturer failed to deliver roughly $65,000 worth of concrete. These purchases were documented in a pair of invoices. At trial, the invoices were admitted into evidence over the defendant’s parol-evidence objections. On appeal, the Court of Appeals affirmed the decision of the trial court to admit the invoices into evidence.
The parties had a distribution agreement. The manufacturer argued that the distributor couldn’t rely on the invoices as evidence of orders placed because the invoices alleged a “separate verbal contract.” The Court of Appeals explained that because the parol evidence rule is designed to exclude evidence relating to the meaning of a written contract, the rule only excludes evidence of verbal agreements made prior to or contemporaneously with the execution of the written contract. (See Piedmont Mt. Airy Guano Co. v. Buchanan, 146 Va. 617, 626 (1926)). The parol evidence rule doesn’t apply to alleged subsequent verbal agreements, the court held, to the trial court did not err in admitting the invoices into evidence.