This section is from the book "The Law Of Contracts", by William Herbert Page. Also available from Amazon: Commercial Contracts: A Practical Guide to Deals, Contracts, Agreements and Promises.
The question of the application of the rule is generally raised by objection to the admission of oral evidence to show the intention of the parties. The parol evidence rule was in its origin applied to sealed contracts, and forbade varying them by parol.1 It has therefore come to be known as the parol evidence rule, but its true place is not in the law of evidence. Any rule of substantive law can be stated in terms of the admissibility of evidence. A few illustrations will suffice to show that this is not a rule of evidence. (1) In its original form the rule was stated as a rule of pleading,2 namely that the legal effect of a sealed instrument could not be aided on behalf of the pleader by averment. (2) While the written contract usually acts substantially as a merger of prior or contemporaneous oral negotiations,3 it also operates as a merger of prior written negotiations,4 as where it merges prior letters between the parties,5 or a prior written instrument not made part of the subsequent contract.6 Thus a term of an accepted bid which is not carried into the complete written contract subsequently entered into between the parties is no part of their contract.7 The real objection to the evidence therefore is lot that it is oral as distinguished from written, but that it is extrinsic - that is, that it tends to prove what is not a term of the contract. (3) If a contract is made and to be performed in one jurisdiction and suit is brought in another, the law of the former jurisdiction applies in determining whether oral agreements are merged by the written contract.8 If the rule were really one of evidence the law of the forum would apply. Being really a rule of substantive law, the law of the place of performance ordinarily controls. Accordingly, there is a strong tendency at Modern Law to treat the parol evidence rule as a rule of substantive law.9
1 Butcher v. Butcher, 1 Bos. & P. N. R. 113; Blake v. Marnell, 2 Ball & B. 35; affirmed, 4 Dow. 248; Palmer v. Newell, 20 Beav. 32.
2 Rutland's Case, 5 Coke 25.
3 See Sec. 1189, 1191.
4 Graham v. Sadlier, 165 111. 95; 46 N. E. 221. Thus a deed merges a prior written contract. Neal v. Hopkins. 87 Md. 19; 39 Atl. 322.
5 South Boston Iron Works v. United States, 34 Ct. C1. 174; Graham v. Sadlier, 165 111. 95; 46 N. E. 221; Christopher, etc., Co. v. Yeager. 202 111. 486; 67 N. E. 166; affirming. 105 111. App. 126; Ralya V. Atkins, 157 Ind. 331; 61 N. E. 726; Gage v. Phillips, 21 Nev. 150; 37 Am. St. Rep. 494; 26 Pac. 60; Hunter v. Hathaway, 108 Wis. 620; 84 N. W. 996.
6 Brown v. Markland, 16 Utah 360; 67 Am. St. Rep. 629; 52 Pac. 597. Still less can the meaning of a contract between A and B be affected by a similar clause in a contract between A and X. Commonwealth Roofing Co. v. Leather Co., 67 N. J. L. 566; 52 Atl. 389.
7 McCrary v. Trust Co., 97 Tenn. 469; 37 S. W. 543.
In South Carolina, however, the parol evidence rule has been treated rather as a rule of evidence. It was held that a demurrer to a complaint, based on a note signd by "A, agent," who was alleged to have executed the instrument as the agent of B, was improperly sustained, even though no evidence in support of the allegations of agency could have been introduced.10 It was, however, suggested that the evidence might show that the principal was doing business in the name of the agent.