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Consideration – Parol or Extrinsic Evidence

The parol evidence rule is a principle that preserves the integrity of contracts by prohibiting the parties from attempting to alter the meaning of the contract through the use of prior and contemporaneous oral or written declarations that are not referenced in the contract.  Where the consideration clause is itself a part of the contract, and not merely a receipt, the general rule as to the inadmissibility of evidence to vary or contradict a written contract prevails.  However, when the recital of consideration in a deed is a mere receipt, parol or extrinsic evidence is admissible to modify, explain, or contradict it.  Evidence of inadequate consideration is relevant only to the issue of fraud.

Consideration duly acknowledged in a deed cannot be contradicted by parol evidence for the purpose of destroying the legal effect of the deed as a conveyance.  In addition, the recital of money consideration in a deed cannot be contradicted by parol evidence showing that the consideration was not to be paid.  However, the recital in a deed of the receipt of consideration does not preclude parol evidence of its nonpayment.

Inside Consideration – Parol or Extrinsic Evidence