Contract Interpretation and the Parole Evidence Rule

When a contract is disputed as to its intent or terms, parties cannot simply throw every piece of evidence they may have collected to persuade the court of the contract’s true meaning. Courts use the Four Corners approach and the Parole Evidence Rule to determine contradictory intent from within the four corners of the document when it is clear and unambiguous. Here is an excerpt from one of my recent briefs in a breach of contract case explaining the standard of contract interpretation: 

“Under long accepted principles one who signs a document is, absent fraud or other wrongful act of the other contracting party, bound by its contents.” Da Silva v. Musso, 53 N.Y.2d 543, 550 (1981). The interpretation of a contract is a question of law to be resolved by the court and evidence outside the four corners of an agreement as to what was really intended is inadmissible to vary the terms of the agreement. Will of Ault, 207 A.D.2d 312, 314 (1st Dept. 1994). Circumstances extrinsic to the agreement will not be considered when the intention of the parties can be determined from the plain and unambiguous terms of the agreement itself. American Express Bank Ltd. v. Uniroyal, Inc., 164 A.D.2d 275 (1st Dept.1990), app. den., 77 N.Y.2d 807 (1991). Under the parole evidence rule, “where the specific alleged misrepresentations are contradicted by or expressly negated by the contract, such extrinsic evidence is inadmissible to establish fraud in the inducement and, in addition, the [party] cannot establish reasonable reliance.” Superior Technical Resources, Inc. v. Lawson Software, Inc., 17 Misc.3d 1137(A), at *10 (Table) (Sup. Ct. N.Y. Co. 2007). 


If you have any legal questions or need help with contract interpretation, please contact Attorney Scott Lanin at (212) 764-7250 x 201 or use the contact form in the right sidebar.

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