The four corners rule contract interpretation, also known as the parol evidence rule, stipulates that if two parties enter into a written agreement, they cannot use oral or implied agreements in court to contradict the terms of the written agreement.
In other words, the rule refers to the four corners of a document or contract. The four corners rule has its origin in the common law doctrine dating back to English courts. It implies that the only legal components of the contract (including the intent of the parties) are included in the four corners of a page. The article analyzes the four corners rule contract interpretation and explains how the United States courts have applied it in practice.
The rule also implies that if there is any other evidence besides the four corners of the document, they cannot be used in court if they directly contradict the information within the four corners of the document. Outside evidence includes any communication between the parties before signing the contract, previous versions of drafts, and others. Because of the four corners rule in the United States, it is vital to include all desired information in the contract itself. The contract must show the clear and defined intent of the parties as well as it can. If one would fail to do so or would rely on promises outside the contract, enforcing them would be very difficult.
Are there exceptions to the four corner rule?
There are some exceptions to the four corners rule, and outside evidence can be permitted in some of the following instances:
- To correct a mistake in the original contract;
- To clear up ambiguous language in the contract and help determine the original meaning;
- To assist the judge or jury in understanding the contract better;
- To clarify a transcription error in the original contract;
- To prove that the original contract is invalid;
- To prove that consideration was never offered for the two parties;
- To show that one party committed fraud, interference, unconscionable behavior, or was under duress when creating the contract;
- To make changes to the original contract if there is a clause that states oral amendments are permissible;
- To name the parties involved in cases of changing names.
Further, a court will most probably always use the four corners rule in a dispute to interpret the contract and the meaning of the words in the agreement. However, the court can use external evidence in circumstances where the words of the agreement are ambiguous or where the intent of the parties to the contract is not clear. Usually, the court will not try to discover hidden meanings or obscure definitions. Instead, the courts in the United States use the plain ordinary meaning of words and clauses to determine the intent of the parties.
Most commercial contracts contain a clause entitled either “Merger”, “Integration”, or “Entire Agreement.” In this clause, there would usually be language indicating that the parties’ understanding of the other provisions of the contract and prior and contemporaneous communications are contained within the four corners of the executed contract.
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