Admissibility of Evidence - Parol Evidence Rule
The Court of Appeals, in W.W.W. Associate, Inc. v. Giancontieri, explained the parol evidence rule as follows:
“A familiar and eminently sensible proposition of law is that, when parties set down their agreement in a clear, complete document, their writing should, as a rule, be enforced according to its terms. Evidence outside the four corners of the document as to what was really intended but unstated or misstated is generally inadmissible to add to or vary the writing.” [1]
It is a question of law for the court to determine whether a writing is ambiguous, and thus whether, any offered extrinsic evidence will be excluded or admitted.[2] In determining whether there is any ambiguity in a provision of an agreement, the court must not limit its inquiry to the text of that contract provision alone, but must examine the contract “as a whole to determine its purpose and intent”.[3] It must consider all of the provisions of the contract within its four corners, reading the contract as a whole and interpreting every part with reference to the whole. [4]
The parol evidence rule also provides that “extrinsic and parol evidence is not admissible to create an ambiguity in a written agreement which is complete and clear and unambiguous.”[5]
The parol evidence rule does not apply when one party urges the agreement is void or voidable. Fraud, mistake or other grounds for rescission cannot be determined solely from the text of the written document.[6] Fraud and lack of consideration may be shown by parol evidence, not to contradict or vary the terms of the contract, but to destroy the written instrument as a valid agreement of the parties.[7]
When the issue involved is whether the parties intended to create a legal relationship or enter into a binding contract, the parol evidence rule does not apply and does not bar the admission of extrinsic evidence to establish that a writing which appears to be a contract is not a contract because the parties never intended it to operate as such.[8] Extrinsic evidence is admissible to show that a writing, although purporting to be a contract, is no contract at all.[9] Parol evidence is admissible in an action for rescission of the entire contract, but it may not be used to advance evidence in support of an argument that certain provisions of the agreement are not to be enforced while others are enforceable.[10]
[1] W.W.W. Associates, Inc. v. Giancontieri, 77 N.Y.2d 157, 162, 565 N.Y.S.2d 440, 442, 566 N.E.2d 639, 641 (1990).
[2] South Road Associates, LLC v. Intern. Business Machines Corp., 4 N.Y.3d 272, 793 N.Y.S.2d 835, 826 N.E.2d 806 (2005) (whether a contract is ambiguous is a question of law and extrinsic evidence may not be considered unless the document itself is ambiguous).
[3] W.W.W. Associates, Inc. v. Giancontieri, 77 N.Y.2d 157, 162, 565 N.Y.S.2d 440, 443, 566 N.E.2d 639, 642 (1990).
[4] W.W.W. Associates, Inc. v. Giancontieri, 77 N.Y.2d 157, 162, 565 N.Y.S.2d 440, 443, 566 N.E.2d 639, 642 (1990).
[5] W.W.W. Associates, Inc. v. Giancontieri, 77 N.Y.2d 157, 163, 565 N.Y.S.2d 440, 443, 566 N.E.2d 639, 642 (1990). See South Road Associates, LLC v. Intern. Business Machines Corp., 4 N.Y.3d 272, 793 N.Y.S.2d 835, 826 N.E.2d 806 (2005); Blonder & Co., Inc. v. Citibank, N.A., 28 A.D.3d 180, 808 N.Y.S.2d 214 (1st Dep't 2006); R/S Associates v. New York Job Development Authority, 98 N.Y.2d 29, 744 N.Y.S.2d 358, 771 N.E.2d 240 (2002).
[6] Battery S. S. Corp. v. Refineria Panama, S. A., 513 F.2d 735, 739–40, 1975 A.M.C. 842 (2d Cir. 1975).
[7] Thomas v. Scutt, 127 N.Y. 133, 137, 27 N.E. 961, 962 (1891); Adirondack Bank v. Simmons, 210 A.D.2d 651, 619 N.Y.S.2d 383 (3d Dep't 1994).
[8] Arner v. Arner, 89 A.D.2d 899, 453 N.Y.S.2d 716 (2d Dep't 1982)
[9] Dayan v. Yurkowski, 238 A.D.2d 541, 656 N.Y.S.2d 689 (2d Dep't 1997); Val-Ford Realty Corp. v. J.Z.'s Toy World, Inc., 231 A.D.2d 434, 647 N.Y.S.2d 488 (1st Dep't 1996).
[10] Bersani v. General Acc. Fire & Life Assur. Corp., Ltd., 36 N.Y.2d 457, 461, 369 N.Y.S.2d 108, 112, 330 N.E.2d 68 (1975).
The Court of Appeals, in W.W.W. Associate, Inc. v. Giancontieri, explained the parol evidence rule as follows:
“A familiar and eminently sensible proposition of law is that, when parties set down their agreement in a clear, complete document, their writing should, as a rule, be enforced according to its terms. Evidence outside the four corners of the document as to what was really intended but unstated or misstated is generally inadmissible to add to or vary the writing.” [1]
It is a question of law for the court to determine whether a writing is ambiguous, and thus whether, any offered extrinsic evidence will be excluded or admitted.[2] In determining whether there is any ambiguity in a provision of an agreement, the court must not limit its inquiry to the text of that contract provision alone, but must examine the contract “as a whole to determine its purpose and intent”.[3] It must consider all of the provisions of the contract within its four corners, reading the contract as a whole and interpreting every part with reference to the whole. [4]
The parol evidence rule also provides that “extrinsic and parol evidence is not admissible to create an ambiguity in a written agreement which is complete and clear and unambiguous.”[5]
The parol evidence rule does not apply when one party urges the agreement is void or voidable. Fraud, mistake or other grounds for rescission cannot be determined solely from the text of the written document.[6] Fraud and lack of consideration may be shown by parol evidence, not to contradict or vary the terms of the contract, but to destroy the written instrument as a valid agreement of the parties.[7]
When the issue involved is whether the parties intended to create a legal relationship or enter into a binding contract, the parol evidence rule does not apply and does not bar the admission of extrinsic evidence to establish that a writing which appears to be a contract is not a contract because the parties never intended it to operate as such.[8] Extrinsic evidence is admissible to show that a writing, although purporting to be a contract, is no contract at all.[9] Parol evidence is admissible in an action for rescission of the entire contract, but it may not be used to advance evidence in support of an argument that certain provisions of the agreement are not to be enforced while others are enforceable.[10]
[1] W.W.W. Associates, Inc. v. Giancontieri, 77 N.Y.2d 157, 162, 565 N.Y.S.2d 440, 442, 566 N.E.2d 639, 641 (1990).
[2] South Road Associates, LLC v. Intern. Business Machines Corp., 4 N.Y.3d 272, 793 N.Y.S.2d 835, 826 N.E.2d 806 (2005) (whether a contract is ambiguous is a question of law and extrinsic evidence may not be considered unless the document itself is ambiguous).
[3] W.W.W. Associates, Inc. v. Giancontieri, 77 N.Y.2d 157, 162, 565 N.Y.S.2d 440, 443, 566 N.E.2d 639, 642 (1990).
[4] W.W.W. Associates, Inc. v. Giancontieri, 77 N.Y.2d 157, 162, 565 N.Y.S.2d 440, 443, 566 N.E.2d 639, 642 (1990).
[5] W.W.W. Associates, Inc. v. Giancontieri, 77 N.Y.2d 157, 163, 565 N.Y.S.2d 440, 443, 566 N.E.2d 639, 642 (1990). See South Road Associates, LLC v. Intern. Business Machines Corp., 4 N.Y.3d 272, 793 N.Y.S.2d 835, 826 N.E.2d 806 (2005); Blonder & Co., Inc. v. Citibank, N.A., 28 A.D.3d 180, 808 N.Y.S.2d 214 (1st Dep't 2006); R/S Associates v. New York Job Development Authority, 98 N.Y.2d 29, 744 N.Y.S.2d 358, 771 N.E.2d 240 (2002).
[6] Battery S. S. Corp. v. Refineria Panama, S. A., 513 F.2d 735, 739–40, 1975 A.M.C. 842 (2d Cir. 1975).
[7] Thomas v. Scutt, 127 N.Y. 133, 137, 27 N.E. 961, 962 (1891); Adirondack Bank v. Simmons, 210 A.D.2d 651, 619 N.Y.S.2d 383 (3d Dep't 1994).
[8] Arner v. Arner, 89 A.D.2d 899, 453 N.Y.S.2d 716 (2d Dep't 1982)
[9] Dayan v. Yurkowski, 238 A.D.2d 541, 656 N.Y.S.2d 689 (2d Dep't 1997); Val-Ford Realty Corp. v. J.Z.'s Toy World, Inc., 231 A.D.2d 434, 647 N.Y.S.2d 488 (1st Dep't 1996).
[10] Bersani v. General Acc. Fire & Life Assur. Corp., Ltd., 36 N.Y.2d 457, 461, 369 N.Y.S.2d 108, 112, 330 N.E.2d 68 (1975).
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