Which statement best describes parol evidence in interpreting ambiguity?

Which statement best describes parol evidence in interpreting ambiguity?

• A. Parol evidence may not be used to interpret ambiguity.
• B. Parol evidence can be used as a defense to explain ambiguity, and trade usage can inform meaning.
• C. Parol evidence overrides the written terms.
• D. Parol evidence only shows that a contract existed.

Answer: (B)

When contract language is unclear, courts allow outside evidence to shed light on what the parties intended. Parol evidence can be used to interpret ambiguous terms, and industry practices or trade usage can inform what a term means in context. This helps ensure the interpretation reflects how the parties actually understood the agreement, not just the bare words. So, the statement that parol evidence can be used to explain ambiguity, and that trade usage can inform meaning, best captures how ambiguity is addressed. The other ideas are mismatched: parol evidence isn’t barred from helping interpret ambiguity, but cannot override written terms; it isn’t limited to proving that a contract existed.

When contract language is unclear, courts allow outside evidence to shed light on what the parties intended. Parol evidence can be used to interpret ambiguous terms, and industry practices or trade usage can inform what a term means in context. This helps ensure the interpretation reflects how the parties actually understood the agreement, not just the bare words.

So, the statement that parol evidence can be used to explain ambiguity, and that trade usage can inform meaning, best captures how ambiguity is addressed. The other ideas are mismatched: parol evidence isn’t barred from helping interpret ambiguity, but cannot override written terms; it isn’t limited to proving that a contract existed.