The Parol Evidence Rule in Nevada

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The following abstract explains Nevada’s parol evidence rule and its application to claims made in her courts.

Parol evidence is inadmissible “[w]hen parties reduce a contract to writing, all prior oral negotiations and agreements are merged in the writing, and the instrument must be treated as containing the whole contract, and parol [evidence] is not admissible to alter its terms.” Cage v. Phillips, 21 Nev. 150, 26 P. 60 (1891).   The parol evidence rule is based on the principle that a written contract is more reliable than oral testimony when determining the terms of an agreement. Michael B. Metzger, The Parol Evidence Rule: Promissory Estoppel’s Next Conquest?, 36 Vand. L. R. 1383, 1386-87 (1983) (hereinafter “Metzger”).

When a written contract is clear and unambiguous on its face, the terms of the agreement must be construed from the language within the contract. Southern Trust Mortg. Co. v. K&.B Door Co.. Inc., 104 Nev. 564, 568, 763 P.2d 353 (1988). Courts are not at liberty to insert or disregard words in a contract. Royal Indem. Co. v. Special Serv. Supply Co., 82 Nev. 148, 150, 413 P.2d 500 (1966). “Parol evidence is not admissible to vary or contradict the terms of a written agreement.” Lowden Inv. Co. v. General Elec. Credit Co., 103 Nev. 374, 379, 741 P.2d 806 (1987).  It may be used to defeat the object and effect of a written instrument only when the evidence is clear, strong, convincing, and attended with no uncertainty. Jacobsen v. Best Brands, Inc., 960 Nev. 643, 615 P.2d 939 (1981).

Parol Evidence may be used to resolve ambiguities in a contract.  Lowden Inv. Co. v. Gen. Elec. Credit Co., 103 Nev. 374, 741 P.2d 806 (1987).  It may also be used when the contract is silent as to the matter addressed in the parol evidence.  Golden Press v. Pac. Freeport Warehouse, 97 Nev. 163, 625 P.2d 578 (1981).

Parol evidence of fraud does not contradict or vary the terms of a written agreement; instead, it illustrates that a binding contract never existed. See Sierra Diesel Injection Serv. v. Burroughs Corp., Inc., 651 F.Supp. 1371, 1377 (D. Nev. 1987).   Nevada law requires that the individual alleging fraud prove it with the “strongest, clearest, and most convincing evidence” before parol evidence is admitted to contradict the existence of a valid contract.  Tallman v. First Nat. Bank of Nevada, 66 Nev. 248, 260, 208 P.2d 302 (1949).

In Tallman, the Nevada Supreme Court stated:

Our conception of the rule, which permits parol evidence of fraud to establish the invalidity of the instrument, is that it must tend to establish some independent fact or representation, some fraud in the procurement of the instrument, or some breach of confidence concerning its use other than a promise directly at variance with the promise of the writing.

Id. at 259 (emphasis added).  Courts only admit parol evidence of fraud that does not directly contradict the written contract.

See also NRS 104.2202, recognizing the rule under the UCC, as well as exceptions for course of dealing, usage of trade, and course of performance (NRS 104.1205).

 

See elements for other claims at the Nevada Law Library

About the Author

Jay Young is a Las Vegas, Nevada attorney. His practice focuses on business law, business litigation, and acting as an Arbitrator and Mediator. Peers have named him an AV-Rated Lawyer, Best Lawyers, a Top 100 Super Lawyers in the Mountain States multiple years, and to the Legal Elite and Top Lawyers lists for many years. Mr. Young has been appointed a part time Judge, a Special Master to the Clark County, Nevada Business Court, as an arbitrator by the Nevada Supreme Court. He has been appointed as an arbitrator or mediator of well over 250 legal disputes from business disputes to personal injury matters. He has been named Best Lawyers for Arbitration. Mr. Young is a respected author of ten books, including A Litigator’s Guide to Federal Evidentiary Objections, A Litigator’s Guide to the Federal Rules of Evidence, and the Federal Court Civil Litigation Checklist.
Mr. Young can be reached at 702.667.4868 or at jay@h2law.com.