The Integrity and Validity of a Written Document - Essay Example

Parol Evidence Rule Name Institution Introduction Hypothetically, when the terms of a written contract stipulate the parties’ obligations in the event of contingencies, Australian courts should, barring additional verbal promises, enforce the contractual terms and obligations1. In other words, the statement advocates for the preservation of the integrity and validity of a written document. Investigating this issue calls for consideration of the methods that Australian courts can use to evaluate varied evidences, including past oral negotiation, promises made once a contract is signed and final writing exists. Courts may as well consider evidence in any way it deems it necessary to generate the most reasonable outcome, or general rules that have a potential to put a court in the direction toward considering certain forms of evidence2. Indeed, these forms of set of laws do actually exist. An example is the parol evidence rule. This paper discusses the statement “where a written contract exists, Australian courts do not and should not provide remedies for failure to fulfil verbal promises made during contract negotiations, unless those promises are included in the written contract.” Discussion is based on the parole evidence rule. Definition of parole evidence rule The rule is concerned with common contractual circumstances, including where written or oral promises are made. It is an essential common law rule in contracts, which prevent parties to a written contract from bringing in extrinsic evidence based on the assumption that the evidence may reveal an ambiguity or add to the written contractual terms that seem to be complete3. The statement, therefore, contends that the Australian courts should approve of the parol evidence rule, which demands that courts should decline from drawing on evidence of the parties to a contract’s preceding negotiations in the process of interpreting a written contract determined to be complete. In other words, the rule may not apply when the terms of the contract are determined to be incomplete, among other exceptions like being a product of errors, fraud, or ambiguity. Significance of parol evidence rule and its exceptions The parole rule serves to preserve the validity, genuineness, and integrity of a written argument4. The rule is receptive to soft and hard construal in certain ways. Both construals are concerned with the application of extrinsic evidences in order to decide if the exceptions are applicable. However, the rule is not absolute. The reason for this is that in such situations, the parol evidence may be unfair to either of the parties. In the case law of Henderson v Arthur (1907)5, an applicant (landlord) and the defendant (a tenant ) were parties to a written contract, which had a promise under a seal for the payment of money at certain occasions. Prior to drawing up the lease, the retailer, and tenant made negotiations regarding the payment. It specified that the tenant could pay rent in instalments. Afterwards, the landlord sued the tenant for failing to make timely payments. The tenant brought in the oral agreement. The Court of Appeal ruled against substituting extrinsic evidence and that terms of the written agreement should proclaim. In the case law, the written agreement invalidated the preceding oral agreement regarding making payment in instalments. In such a situation, it is clear that the ruling was unfair to the tenant yet he failed to change the contractual terms prior to signing it. It could therefore be reasoned that in such situations, Australian courts should disregard the rule as the parties may be aggrieved when evidence are not considered just because the terms in dispute have not been specified in the written contract. Because of a perceived unfairness to the aggrieved parties, there are several exceptions to the parol evidence rules. The exceptions to the parole evidence rule are also significant as they serve to resolve ambiguities and to create grounds for contract defences. The significance of making a distinction between partly and complete integrations is pertinent to the form of evidence exempted under the parol evidence rule. Australia, as a jurisdiction, should also therefore allow for the several exceptions to the rule in order to allow for extrinsic evidence to be introduced for clarity purposes and to ensure fairness to both parties. Such admission rules would also make it easy for Australian courts to ascertain whether a contract has been completely integrated as well as whether the parol evidence is indeed appropriate. Exceptions to the parol evidence rule Rectification The initial exception hinges on rectification. Essentially, rectification is equitable remedy that recommends the revision of a document in cases where a transcription error occurs while recoding a preceding oral agreement. Rectification is not applicable without exception to the parol evidence rule, as introducing extrinsic evidence is necessary to validate the content of an original oral agreement6. However, rectification is not necessarily guaranteed and therefore some conditions have to be satisfied. In the first instance, the parties have to come up with a complete agreement in writing. In the second stage, there has to be a proof of erros in the document. In the third place, there has to be proof that no third party has interest in the contract’s subject matter. In the last place, the changes should be able to express in clearer terms. Rectification was specifically held in the case law of Webster v Cecil (1861)7, when Webster argued that the written document has specified the quotation for the price of land as £1,250. However, Cecil managed to show that he had previously turned down an offer of £2,000, and that his real quotation was £2,250. The price was therefore changed on that basis. Completeness of contractual terms In the second exception, the parol evidence rule should have been partially written and partially oral. What this implies is that Australian courts should consider that a contract is not exclusively a written contract and because of this, parol evidence rule is not absolute. In this sense, extrinsic evidence is allowed when it proves that parties to a contract made a contract in both written and oral terms. Essentially therefore, the parol evidence rule is insignificant when oral evidence is introduced. In the case law of Van den Esschert v Chappel (1960)8, the claimant was a buyer interested in signing a contract to purchase a house. However, prior to signing the contract, the seller made an oral declaration that the house would not be infested by white ants. However, months later after buying the house, the claimant discovered that the house was infested by white ants and sued the defendant to claim for costs of repair and won, despite the oral terms not being in the written agreement. The court argued that before buying the house, the information on the existence of white ants was a significant one that would have made the plaintiff to reconsider signing the agreement. Trade usage or custom An exception to the parol evidence rule also applies in respect to trade usage or custom. There has to be evidence showing that custom or trade usage is component of the contract. This evidence is admissible in the court. In this form of exception, parol evidence rule cannot exempt extrinsic evidence of trade usage or custom. As illustrated in the case law of Hutton v Warren (1836)9, the plaintiff issues the defendant notice to vacate his leased farm and made claims that a local custom existed demanding that he should be entitled to a refund from the landlord for the labour and seeds he had used on the leased farm over the years. He further asserted that the right is enforceable despite not being specified in the written contract. The court ruled in favour of the claimant, which held that the contract had to be considered based on the established custom. Suspension of operation The parol evidence rule would also be exempted in cases where an operation is suspended. In this case, it states that implementing a contract ascertained in writing is verbally made condition on the events of certain specified event. In this case, extrinsic evidence can be introduced to prove that the contract has not been implemented. As showed in the case law of Pym v Campbell (1856)10, Pym had considered selling to Campbell a multifunctional machine that was a personal invention. The two were in agreement that Pym would had to provide details explaining the functions of the machine to Campbell’s two engineers, who would then advise Campbell on whether to purchase the machine or not. However, Pym only managed to meet one engineer, who later approved his machine, despite the agreement specifying that both engineers had to approve the machine. Pym claimed that the contract has to be enforceable and that oral evidence should not be introduced. The court held was that oral evidence is admissible and since the other engineer had not approved the machine, the contract would not be enforceable. Misrepresentation and mistake An exception to the parol evidence rule also applies in the event of misrepresentation, when a claimant looks forward to avoiding a penalty from a contract on discovering that the contract has come to being as a consequence of mistakes or misrepresentations11. In such circumstances, Australian courts should allow the claimant to introduce extrinsic evidence to show that he entered into the contract after having been misled by misrepresentation, or undue influence. Misrepresentation occurs when a statement is made falsely, it results to false representation or fraud, and the court may terminate the contract, as illustrated in the case law of Derry v. Peek (1889)12. An example of mistakes in contract is illustrated in the in the case law of Joscelyne v Nissen [1970],13 a daughter who was the owner of a house signed a contract with her father to allow him to live in the house for free. In their conversation however, the accepted she would take care of the entire household expenses. However, the clause regarding payment of the bills was excluded from the written agreement by mistake. The court held that for the oral evidence to be admitted to invalidate the contract, as it was excluded by mistake. Ambiguity of a written contract The parol evidence rule is also not allowed when there is some form of ambiguity in a written contract. In such instances, it would be difficult for courts to determine the parties’ intentions, because of the ambiguous terms in the written document14. Conversely, parol evidence may be introduced to clarify ambiguous terms or phrases. As observed in the case law of Akot Pty v Rathmines Investments Pty Ltd [1984]15, contracting parties agreed to buy and sell an apartment situated on the fifth floor of a building. The floor plan that has been specified in the contract showed five units, yet failed to identify each unit by the number. Still, the determining the unit that the parties had agreed to transact was easy using a brochure. The court held that the brochure had sufficiently identified the apartment. Conclusion In conclusion, based on the parole rule, Australian courts should advocate for the preservation of the integrity and validity of a written document. The rule serves to preserve the validity, genuineness, and integrity of a written argument. However, the rule is not absolute. Indeed, there are exceptions to the parol evidence rule, as certain agreements or terms that are agreed to by both parties yet the terms were excluded in a written contract. The initial exception hinges on rectification. In the second exception, the parol evidence rule should have been partially written and partially oral. Next, an exception applies in respect to trade usage or custom and in the event of misrepresentation or mistake. It is also not allowed when there is some form of ambiguity in a written contract. References Akot Pty Ltd v Rathmines Investments Pty Ltd [1984] 1 Qd R 302 Derry v Peek (1889) LR 14 App Cas 337 Duncan, W.D. Is Silence Still Golden? Misrepresentations In Land Dealings And The Trade Practices Act 1974 (Cwth) (9 Jan 2017) < https://lr.law.qut.edu.au/article/download/292/284> Epstein, David, 'Contract Law's Two "P.E.'s: Promissory Estoppel and the Parole Evidence Rule,' (2010) 62.2 Baylor Law Review, 398-400 Henderson v Arthur [1907] KB 10 Hutton v Warren (1836) 1 M&W 460 Joscelyne v Nissen [1970] 2 QB 86 Mothersole, Brenda and Ridley, Ann, A-level Law in Action (Cengage Learning EMEA, 1999) Posner, Eric, 'The Parol Evidence Rule, The Plain Meaning Rule, And The Principles Of Contractual Interpretation,' (1998) 146 University Of Pensylvania Law Review, 532-8 Pym v Campbell (1856) 6 E&B 370 Van den Esschert v Chappell [1960] WAR 114 Webster v Cecil (1861) 30 Beav 62 Read More