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Economics

The Parol Evidence Rule: Limiting Contract Interpretation

Quick fact

The parol evidence rule is why you cannot generally sue over promises made before a written contract was signed, even if those promises were decisive in getting you to sign.

Why this is interesting

You negotiate a detailed deal, shake hands on every point, but when the contract is signed, it says something different. Can you drag the earlier conversation into court to fix it? Often, no—and here's the surprising reason why.