The traditional parol evidence rule reduces the scope of litigation by providing that unless a completed contract is uncertain or ambiguous, courts will not entertain extrinsic evidence, such as allegations of contrary oral representations, to alter its interpretation. In the 1968 case of Pacific Gas & Elec. Co. v. G. W. Thomas Drayage Co., the California Supreme Court and Justice Roger Traynor adopted a much more liberal alternative rule in which extrinsic evidence could be brought in to create ambiguity even when at variance with clear provisions. In a 1988 case, Judge Alex Kozinski, obliged to apply the doctrine in a diversity case, noted that the confusion created by PG&E and subsequent opinions “casts a long shadow of uncertainty over all transactions negotiated and executed under the law” of California.
In the case of Jibe Audio, LLC v. Beats Electronics, LLC, the Washington Legal Foundation is urging the California Supreme Court to hear the case and use it as an occasion to reconsider its approach to the subject: “California’s conception of the parol evidence rule creates uncertainty for people and businesses engaging in commercial transactions. Allowing this rule to persist will just allow the mass exodus of business from California … to continue,” said WLF’s Richard Samp. [case detail, press release, brief, background (James C. Martin and Benjamin Shatz)]