law-parol-evidence-rule | contract construction and contract enforcement | ambiguous and unambiguous contracts

When the parties have concluded a valid, integrated agreement, the parol evidence rule precludes enforcement of a
prior or contemporaneous inconsistent agreement.  Ledig v. Duke Energy Corp., 193 S.W.3d 167, 178 (Tex. App.—
Houston [1st Dist.] 2006, pet. denied); Baroid Equip., Inc. v. Odeco Drillling, Inc., 184 S.W.3d 1, 13 (Tex. App.—
Houston [1st Dist.] 2005, pet. denied).  A written instrument presumes that all prior agreements relating to the
transaction have been merged into it and will be enforced as written and cannot be added to, varied, or contradicted
by parol testimony.  Baroid Equip., 184 S.W.3d at 13.  The parol evidence rule “is particularly applicable when the
written contract contains a recital that it contains the entire agreement between the parties or a similarly-worded
merger provision.”  Id.  When parol evidence is determined to be inadmissible, it has no legal effect and merely
constitutes proof of facts that are immaterial and inoperative.  Id.  

Parol Evidence Rule & Mutual Mistake Defense

Generally, parol evidence is inadmissible to vary or contradict the terms of an unambiguous deed.  Parol
evidence is admissible, however, to demonstrate that, through fraud, accident, or mutual mistake, the deed
does not reflect the parties’ true intentions.  Atlantic Lloyds Ins. Co. of Tex. v. Butler, 137 S.W.3d 199, 212–
13 (Tex. App.—Houston [1st Dist.] 2004, pet. denied).  The parol evidence rule thus does not apply as a
bar when a party alleges that, by reason of a mutual mistake, the agreement “does not express the real
intention of the parties.”  Id. (quoting Marcuz v. Marcuz, 857 S.W.2d 623, 627 (Tex. App.—Houston [1st
Dist.] 1993, no writ)); see also Massey v. Massey, 807 S.W.2d 391, 405 (Tex. App.—Houston [1st Dist.]
1991, writ denied) (“A spouse who is a party to a deed transaction may not introduce parol or extrinsic
evidence to contradict the express recitals in the deed without first tendering evidence of fraud, accident,
or mistake.”).  A mutual mistake occurs when the parties to an agreement have a common intention, but
the written contract does not reflect that intent.  Marcuz, 857 S.W.2d at 627
.

To
prove mutual mistake, a party must show (1) the parties’ true agreement, and (2) that the instrument incorrectly
reflects that agreement because of a mutual mistake.  Butler, 137 S.W.3d at 213.  In his amended counter-petition,
Cotton pleaded fraud, ambiguity, and mistake, and alleged that Dyer purchased the land from Baker with knowledge
of the co-tenancy relationship.  Cotton offered Baker’s testimony to establish that the deed purporting to convey the
entire fee estate to Dyer was fraudulent or the result of a scrivener’s error.  Baker testified that, before they finalized
the conveyance, he told Dyer that he did not own a full interest in the property and did not intend to convey the
entire fee estate.  According to Baker’s testimony, therefore, the deed did not correctly state Baker’s actual interest
in the property.
Baker’s testimony tends to prove mutual mistake, and therefore, the parol evidence rule does not bar its admission.  
We hold that the trial court did not err in allowing Baker to testify.


David J. Sacks, PC v. McIntre Haden, No. 07-0472 (Tex. Sep. 26, 2008)(substituted per curiam opinion on motion for
rehearing)(
parole evidence rule bars evidence of oral agreement to cap attorney fees)
DAVID J. SACKS, P.C. D/B/A SACKS & ASSOCIATES v. CHARLES MCINTYRE HADEN, JR., INDIVIDUALLY, AND
CHARLES MCINTYRE HADEN, JR. & COMPANY D/B/A HADEN & COMPANY; from Harris County; 1st district (01-01-
00200-CV, 222 SW3d 580, 03-08-07)
motion for rehearing granted
The Court's opinion and judgment of July 11, 2008 are withdrawn and the opinion and judgment of this date are
substituted.          
Pursuant to Texas Rule of Appellate Procedure 59.1, after granting the petition for review and without hearing oral
argument, the Court reverses the court of appeals' judgment, renders judgment in part, and remands the case to
the court of appeals.
Per Curiam Opinion


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