Essential Elements of a ContractĪ contract is a legally binding document. That means that the parol evidence rule is based on prior decisions made by a higher court. This rule is not found in either federal or state statutes, as it exists in common law. “Once the parties have reduced their agreement to a writing that they intend to contain the final and complete statement of their agreement, then evidence of terms that would supplement or contradict it are not admissible.” The actual text of the parol evidence rule states:
