What is the parol evidence rule, and what is the court's reasoning in applying the rule?

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Question - a) What is the parol evidence rule, and what is the court's reasoning in applying the rule?

Answer - Parol evidence rule restrict a party in terms of written contract to present the extrinsic evidence which is supplement to the written pre-existed instrument. In other words, the rule bars the introduction of prior evidence or contemporaneous agreement or negotiation which creates variation or modification in the terms of written contract. The parol evidence rule is called as evidentiary rule which introduced how and when the extrinsic evidence which is outside the written document can be used in determination of meaning of terms in contract.

The parole rule applies immediately after the parties submit their written final agreement and no parol or any extra evidence will be applicable to modify the complete and final contract. Court would understand the language used, having reasonable terms in document, intention of the parties and consideration of all surrounding circumstances to apply parol evidence rule(Australia Contract law, 2021, pg.1(2)).Later, Court does not admit any agreement which is not found in the written contract under the rule of parol evidence.

b) List and explain the exceptions to the parol evidence rule.

Answer - The exception to Parol evidence rule applies in many circumstances such as mistake in terms of contract, any existence of fraud, ambiguity, not fully written, interference of tortious with contract, unconscionable behaviour, unpaid of consideration and recognition of parties in the matter of contract.

In the case of

In the case of DTR Nominees Pty V Mona Homes Pty Ltd, [1978], HCA 12; (1978)138, Stephen and Jacobs JJ, court stated that the evidence of surrounding circumstances which are in ambit of mutual facts will be admitted to recognize any descriptive term. The evidence from surrounding circumstances will be considered in case if the language of the contract appears ambiguous and appearing as double meaning.

In the case of Van Den Esschert V chappell, the contract was partly written and partly oral. Ms chappell purchased house from Van Den Esschert and before signing contract she confirmed if house does not have ants and seller assured that there are no ants. Later after some months Ms Chappell discovered ants and sued Esschert and court ordered seller to pay the rectification cost even after found that contract was incomplete.

In the case of Codelfa Construction Pty limited V State Rail Authority, 1982, the evidence of surrounding circumstances were taken into account to help in construction of contract(Australia Contract Law, 2021, p.1(1)). Court admitted that the general rule to Parol is that that extrinsic evidence will not be acceptable however, the intention of parties are required to be clarified in constructing of contract.

In case of Prenn V Simmons, (1971), court held that the evidence of prior negotiation cannot be ccepted but the evidence in relation to objectivity and genesis was admitted.

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