malvernmugadzikwaTHE parole evidence rule stipulates that where an agreement has been reduced to writing, whether as required by the law or at the instance of the parties, the only admissible evidence about the terms of the deal is the written document.
No evidence of other agreements may be adduced to indicate that the agreement was different or to explain precisely what the parties intended (Ellse v Johnson SC37/2016).
Exceptions
However, this rule has certain exceptions that allow for the admission of extrinsic evidence in certain circumstances, such as to explain ambiguous terms or to show fraudulent intent.
These exceptions must be carefully considered when interpreting and enforcing contractual agreements.
(a) The first one is not strictly an exception as such. In fact, the parole evidence rule does not exclude the leading of evidence to establish that the contract was subject to a suspensive condition because one will not be varying the contract.
(b) The rule would not be applicable where it is the intention of the parties that the contract should be partly in writing and partly verbal. The court will give effect to the intention of the parties. See Avis v Verseput, where the court took the view that this was a situation where the parties had intended that their contracts should be partly verbal and partly written.
The court held that the oral agreement will be given effect. See also Harlin Angels Hotel Ltd, where a contract was held by the court to be constituted by the lease agreement and a letter.
To counter the problem of including evidence outside the written contract, one has to let in an integration clause or a whole contract clause.
This will be a term stating that the document will be the entire contract between the parties and all terms, conditions, warranties or representations not herein included will be expressly excluded. This means one will be entrenching the parole evidence rule into the contract. See Mhene v Tembes.
The parole evidence rule is designed to promote certainty.
The contract document serves all the purposes and evidential aspects. However, the exceptions to the parole evidence rule make the written document uncertain and, ultimately, the court has to balance the competing interests of the parties.
The rule does not also apply in the following instances:
(c) Where the validity of the contract itself is being challenged by one of the parties thereto. See Cok v Osborne, where the court ruled that one could not exclude oral evidence to establish grounds of invalidity of a contract, for example, mistake — thus courts are sometimes prepared to disregard the integration clause, as it did in Mhene v Tembes.
An integration clause is often coupled with a non-variation clause.
If the parties intend to vary the terms of the contract, this has to be in writing and signed. Any purported oral evidence to vary the terms of the contract will be of no force and effect.
The non-variation clause is binding on both parties and any purported oral variation inconsistent with such a clause would be invalid.
However, a non-variation clause does not in itself preclude a waiver. Accordingly, a non-variation clause is often coupled with a non-waiver clause. A non-waiver or indulgence clause says no indulgence made by the party can be taken to be a waiver of his rights.
The Supreme Court considered this issue in the case of AFC v Pocock 1986 (2) ZLR 229 – SC 135/96. Pocock borrowed some money from AFC.
According to the contract, AFC could come any time and sell the farm in the event of arrears. The contract had a non-variation and non-waiver clause. Pocock fell into arrears and had discussions with one R, AFC’s general manager, where it was agreed that instead of repossessing the farm, AFC would enter into an agreement of payment in terms of which Pocock would register a stop order.
After that agreement, Pocock was surprised to receive a letter from AFC threatening that it would move in and sell the property.
Pocock argued that they had entered into an oral agreement with R, so AFC could not repossess and sell his property.
It was argued for AFC that there was a non-variation and non-waiver clause and they were, therefore, entitled to proceed as they had done. Pocock argued further that the oral agreement constituted a waiver by AFC of its rights in terms of the contract.
Pocock further tried to argue that AFC should be stopped from denying the existence of the oral agreement with its general manager. Pocock’s arguments were rejected by the court, which ruled in favour of AFC.
On page 236, Gubbay CJ (as he then was) said: “I am satisfied, therefore, that the respondent cannot rely successfully on either waiver or estoppels, for the effect of the clause is to negate both defences. Under it, the respondent agreed that condonation of breach will not constitute a waiver of the appellant’s rights arising from the breach and, at the same time, accepted notice that any conduct of the appellant that might otherwise give rise to estoppels may not be taken by him to be such conduct.”
LEGAL DISCLAIMER: The material contained in this article is set out in good faith for general guidance in the spirit of raising legal awareness on topical interests that affect most people on a daily basis. They are not meant to create an attorney-client relationship or constitute solicitation. No liability can be accepted for loss or expense incurred as a result of relying in particular circumstances on statements made in the article. Laws and regulations are complex and liable to change, and readers should check the current position with the relevant authorities before making personal arrangements.
Arthur Marara is a corporate law attorney practising law in Harare. He is also a notary public and conveyancer. He is passionate about labour law, commercial law, family law and promoting legal awareness and access to justice. He writes in his personal capacity. You can follow him on social media (Facebook Attorney Arthur Marara), or WhatsApp him on +263780055152 or email attorneyarthurmarara @gmail.com
Bongani Ndlovu
Online Reporter