The Written Contract as Safe Harbor for Dishonest Conduct

The parol evidence rule excludes extrinsic evidence of prior or contemporaneous understandings of an agreement when the parties have signed a document that purports to encompass their entire understanding. In theory, this rule is designed to add certainty to business transactions and to inhibit the introduction of unreliable evidence into the litigation system. But in practice, if we eliminate the introduction of precontractual representations and understandings from the dispute resolution process, we create a safe harbor for unethical business practices in the early stages of contract formation. Using insights from linguistics and psychology, the Article argues that this problem is likely to occur regardless of what version of the rule is applied in any particular circumstance. Therefore, this Article recommends solutions from outside the law of contract to address both precontractual misconduct and false testimony in the courtroom. It recommends stronger sanctions against dishonest testimony in business disputes, and stronger consumer protection to avoid precontractual heavy-handedness and outright fraud