Lecture 7-Parol Evidence Rule

Question 1

Parole Evidence Rule

Answer 1

Where the parties claim that the contract is not the whole contract

Question 2

Extrinsic evidence

Answer 2

The general rule is that extrinsic evidence WILL NOT be admitted which seeks to vary or contradict the terms of a written contract.

Shogun Finance Ltd v Hudson [2003] per Lord Hobhouse: the parol evidence rule “is fundamental to the mercantile law of this country” and that “the certainty of the contract depends on it”

Question 3

Exceptions

Answer 3

1.Interpreting a contract
2.Statutory rights
3.’Not a complete record’

Question 4

Interpreting a contract

Answer 4

The first exception is that the parol evidence rule does not apply to interpreting a contract. If a court is trying to find out what the terms of a contract mean, rather than what they are, it can and often will look to other records of the parties’ discussions.

Question 5

Statutory rights

Answer 5

A second exception is that the parol evidence rule does not apply where the contract infringes a party’s statutory rights

Question 6

‘Not a complete record’

Answer 6

Where the contract is partly written and partly oral, the parol evidence rule doesn’t apply i.e. the written contract is incomplete and wasn’t intended to reflect the agreement between the parties (see e.g. Couchman v Hill)

Question 7

Case Authority

Answer 7

J Evans and Sons Ltd v Andrea Merzario Ltd [1976]

“The parol evidence rule only operates where the whole agreement was recorded in writing. And there is only a presumption that a written contract contains the whole agreement. So if one can rebut this presumption, the parol evidence rule has no purchase.”

Question 8

How is completeness assessed?

Answer 8

The first circumstance the courts will take into account relates to the nature of the document itself. If the document is missing terms that were of importance, or that a complete contract would have needed to cover, it will not be treated as a complete record of the parties’ understanding.

It is for the party arguing that the written document was not a complete record to make a case that it was so. If the party cannot adduce sufficient evidence showing this, the courts will apply the parol evidence rule, and treat the written document as a complete record.