There are two major rules to follow when it comes to contracts and contract law. One is to get everything in writing, and the other is to know exactly what you are signing. Should a contract dispute result in the filing of a civil lawsuit, the written word often supersedes any oral or implied agreement. This is the basis for what is known in contract law as the parol evidence rule. Under common law, parol evidence such as a signed contract is considered to be "fully integrated," meaning it is the last and most official form of a binding agreement.
This parol evidence rule can be legally challenged, however, by the presentation of extrinsic evidence in court. Extrinsic evidence might include oral changes to the contract before it became finalized, or external circumstances such as fraud or coercion which could make the parol evidence unenforceable. It could also be argued through extrinsic evidence that the contract was signed under duress, or that it is not the latest or final draft of the contract.
Parol evidence, at least in the eyes of contract law, is supposed to be clear and unambiguous. The document may state in writing that A agreed to paint B's garage by a specified date. If B provides evidence that A failed to complete the job by that date, the judge should have a signed contract stating the precise arrangements. This would be considered parol evidence. If the judge ruled strictly on the terms of the contract, B would most likely prevail in the lawsuit and A would have an obligation to honor the contract or return any payments already received.
Extrinsic evidence, however, may be persuasive enough to override parol evidence under the right circumstances. If A could prove that B told him over the phone he could wait a few more days to paint B's garage, or that B wouldn't allow A on the property for some reason, then the judge might consider the extrinsic evidence before making a ruling. Extrinsic evidence often indicates that the contract has not been completed or integrated, however, so the judge may have to decide if both parties actually came to a meeting of the minds before signing a final contract.
Parol evidence can also be examined for signs of ambiguity or fraud, although the legal definition of "ambiguity" can be ambiguous in itself. In our case scenario, the signed contract might read "A agrees to paint B's garage in a reasonable amount of time." This might be construed as an ambiguous statement, since A's definition of reasonable time might be different than B's. It could also turn out that A is not actually a professional painter, and never intended to honor his side of the contract. This would prove that fraud had occurred and B could indeed recover damages from A for not finishing the work.
In general, parol evidence is considered to be the final and legally binding word when it comes to contracts, but extrinsic evidence may be considered by the court under a limited number of circumstances. This is why it is vital for both parties to read and understand a contract completely before signing, since any other informal changes or additions may not be recognized in a court of law at a later date.
