What Is the Parol Evidence Rule

question 23

Multiple Choice

What is the parol evidence rule?

• A)the rule that requires that persons on parole seek the approval of a court before entering into any contract
• B)the rule that requires a party to a contract from adducing evidence from a third party regarding discussions he or she may have had with such a third party about the provisions of a contract
• C)a rule that prevents convicted persons on parole from entering into contractual obligations
• D)the rule that prevents a party from adding to a contract a term that was previously agreed upon but was not included in the final written contract.
• E)The rule that prevents a court from interpreting a contract that is illegal.

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Definitions:

Cash Dividend

A direct payment of profits from a corporation to its shareholders, often distributed quarterly.

Equity-Method

An accounting technique used by firms to assess the profits earned by their investments in other companies, by recording such profits as income.

Deferred Taxes Payable

Liabilities for taxes owed that are recorded on the balance sheet to reflect timing differences between tax laws and accounting practices.

Net Income

Net Income is the total profit of a company after all expenses, taxes, and costs have been deducted from total revenue, indicating the company's financial health.