Question

Amy owned a small cafe. Smoking was allowed in restaurants in those days, and a salesman, Mike, convinced her that if she leased a cigarette machine from him, it would add to her profits because people liked to smoke after or before a meal. She leased the machine but the amount of cigarettes she sold did not cover the cost of the lease. She refused to pay the lease and terminated the agreement. She claimed the Mike had promised she would earn a profit and this induced her to enter into the contract. Mike sued based on terms of the contract and said “there are no representation or warranties beyond those expressly contained in this written agreement”. In this case, Mike is relying on
a. The statute of frauds
b. The parol evidence rule
c. The doctrine of substantial performance

Answer 1

The answer will be “b” The parol evidence rule.

Explanation: The parol evidence rule is a contract law doctrine that prevents parties to a written contract from presenting “extrinsic” evidence of terms in a contract that contradict, modify, or vary the terms of a written agreement, when that written agreement is considered complete and finalized.

In other words as per this rule outside evidence cannot be used when there is a written contract. Here the promise by Mike that Amy will earn profits from leasing the cigarette machine is an oral evidence and is not part of the written contract.