Parol Evidence Rule (PER).ppt

7/25/2019 Parol Evidence Rule (PER).ppt

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Parol Evidence Rule (PER)

Definition

Refers to extraneous evidence such as an oral agreement

or even a written agreement that is not included in therelevant written document such as contract agreement.It preserves the honor of written documents or

agreements by prohibiting the parties from attempting toalter the meaning of the written document through the use

of prior and simultaneous oral or written declarations thatare not referred to in the documentIn order for the rule to be successful, the contract in

question must be a fully integrated (included) in writing;it must, in the udgment of the court, be the final

agreement between the parties and not a mere draft.


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What Is The Rationale Behind The Parol EvidenceRule?

reflective of the parties true intentions

Why Is The Parol Evidence Rule Necessary?

to encourage parties to draft better contracts;

to reducing litigation and arguments betweenparties over the meaning of a written document; andto assist the court in determining the true intentions

of the parties at the time of the formation of thecontract.


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Common la !osition!

"he parol evidence rule endorses a principle of thecommon law of contracts that a written contract

embodies the complete agreement between the partiesinvolved that is the document is the sole repository(store) of the terms of the contract."he rule therefore generally forbids the introduction of

any extrinsic evidence"ee# $aco%s v& Batavia ' eneral Plantations Trust

td #$%&' $ h &*+


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*alaysian !osition!

ections %$ to %% of the -ct deal with the exclusion oforal by documentary evidence.

ection %$ provides/hen the terms of a contract or of a grant or of any other

disposition of property have been reduced by or byconsent of the parties to the form of a document, and inall cases in which any matter is required by law to bereduced to the form of a document, no evidence shall be

given in proof of the terms of the contract, grant or otherdisposition of property or of the matter except thedocument itself, or secondary evidence of its contents incases in which secondary evidence is admissible underthe provisions hereinbefore contained0.


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"his section requires the production of the documentitself for proof of its contents.

"he first limb of section %$ provides that when termsof a contract, grant or disposition of property have

been reduced by or by consent of the parties to theform of a document then no evidence shall be given in

proof of the terms of the contract, grant or dispositionexcept the document itself (the primary evidence) orsecondary evidence.

1owever, section %$ only excludes oral evidence onthe terms of the written contract. 2ral evidence is stilladmissible to prove the existence of a contract.


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ection %& of the -ct will only apply after the document

has been produced for the purpose of excluding evidence ofany oral agreement or statement to contradict, vary, add toor subtract from its terms.ection %& provides that/hen the terms of any such contract, grant or other

disposition of property, or any matter required by law to be

reduced to the form of a document, have been provedaccording to section %$, no evidence of any oral agreement orstatement shall be admitted as between the parties to any suchinstrument or their representatives in interest for the purposeof contradicting, varying, adding to, or subtracting from itsterms0.

"his section provides that as a general rule evidence of anyoral agreement is not admissible as between the parties tocontradict, vary, add to or subtract from the terms of thewritten agreement proved under section %$ of the -ctunless the evidence sought to be introduced falls within oneof the provisos of the section.


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ections %$ ad %& are based on the concept of the best

evidence rule0. "he parol evidence rule thus based onthe best evidence rule0 i.e. the best evidence that the

party must produce. 3oth sections supplement(connected) to each other.

3oth must also be read together with section $''(evidence as matter to writing) of the 4vidence -ct$%56. "his section deals with the exclusion of oralevidence when the matter on which a witness is

testifying or is about to testify the contents of adocument.


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"ee # +u,ustine Paul $C in Datu- Tan en, Tec- v "ar.ana "dnBhd #$%%+ ' 789 :&%

"ee# PB a.endra,ad-ar $ in Bai /ira Devi v 0fficial +ssi,nee-IR $%5* ''* stated that

"ee also# Ins!ector eneral of Police ' +nor v& +lan Noor %in

1amat #$%** $ 789 &6. it is clear that under section %$ of the 4vidence -ct no evidence

can be given in proof of any matter which is required by law to bereduced to a form of a document and section %& prohibits the givingof oral evidence to contradict or vary or explain the terms of suchdocument0.

"ection 23 ' 24 a!!lies to criminal trialsee +h *ee v PP #$%+ $ 789 &&6 < PP v Tan "ie /ui

#&66* * 89 $'&.


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ection %: = %* of 4vidence -ct $%56.

Read together with section %& proviso (f)! "he rule ofambiguity of a document. In 5a%er *erlin (*) "dn Bhd ' 0rs v ye Thai "en,

#$%*5 & 789 :*6, the court laid down the principle thatwhen there is no ambiguity in a written agreement then thegeneral rule against extrinsic evidence applies.

-ccordingly, there are to ty!es of am%i,uities in which adocument suffer from namely!+!!arent6clear6!atent am%i,uity! -mbiguity is clear on

the surface of the record>document. If we read the wholedocument, we cannot understand on the face of it. "he court

will not allow extrinsic evidence to cure patent ambiguity byproducing extrinsic evidence.atent6hidden am%i,uity! 2n the face of it, it is all right

but cannot exactly be precise. ?or example if there are &places of the same name we can introduce extrinsic to curethe defect.


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The e7ce!tions


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ection %& provides /hen the terms of any such contract, grant or other

disposition of property, or any matter required by law to bereduced to the form of a document, have been proved

according to section %$, no evidence of any oral agreement orstatement shall be admitted as between the parties to any suchinstrument or their representatives in interest for the purposeof contradicting, varying, adding to, or subtracting from itsterms0.

"his section provides that as a general rule evidence of anyoral agreement is not admissible as between the parties tocontradict the terms of the written agreement proved undersection %$ of the -ct unless the evidence sou,ht to %eintroduced falls ithin one of the !rovisos of the section&"his section applies only after the document has been

produced to prove the terms in accordance with section %$of the -ct.- party is not precluded from adducing oral evidence to

contradict a recital of fact in the contract.(ee anam d6o Ra.amany v "omoo s6o "innah #$%*' &

789 &%6)


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If the document does not constitute a contract between theparties and it is also not a document required by law to bereduced to a form of a document, oral evidence is not

excluded

Phion, 1hon v Chon Chai 5ah #$%+6 & 789 $$'

If the intention of the parties is to reduce some portion oftheir agreement into writing and leave the rest as oralagreement, they may in such a case give extrinsic evidenceas to the portion not put in writing. Damn $adhas v Paras Nath "in,h #$%5 & 789 :*.

In Tan Chon, *otor Co ("dn) Bhd v +lan *c1ni,ht#$%*: $ 789 &&6, where it was held that some terms are given orally and some in writing, oral

evidence could be given to prove the terms agreed to orally0.


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"he scope of the words any matter required by law to be reduced to the formof a document0 in this section show that the section applies to bilateral anddispositive documents. ection %$ is much wider than section %& whereby itapply to both unilateral and bilateral contract and in both dispositive and non= dispositive documents.

"here are also a vital difference between section %$ and %& as a result of theuse of the word as between the parties to any such instrument0 in section %&."his part of the section shows that section %& applies only to the parties to aninstrument and not to strangers. (Read with section %% (loo@ at the illustrationgiven) where a persons other than parties may give extrinsic evidence to varythe document if it effected his interests).

I%rahim $ in Director eneral of Inland Revenue v Ee "im "ai #$%++ &

789 :& stated ection %& -pplies 2nly to Aarties to Instrument and Bot totrangers. "he words Cas between the parties to any suchinstrumentC are very important, as they and the reference toCseparate oral agreementC in proviso (&) restrict the application ofthe rule only to the parties to the document or their privies (haveany interest). It does not apply to strangers who cannot be affected

by the terms of a document to which they were not parties andwhich may contain untrue or collusive statements to serve somefraudulent purpose or things preudicial to their interests; whereassection %$ applies to both strangers and parties. o, persons otherthan the parties to the instrument or their representatives ininterest, i.e., third parties, are not precluded from giving extrinsic

evidence to contradict, vary, add to or subtract from the terms ofthe document (section %%)0.


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"he provisos to the section operate as an exception to the general rule. "alleh +%as 5$ in Tan Chon, *otor Co ("dn) Bhd v +lan

*c1ni,ht #$%*: $ 789 &&6 stated

"here is this rule of evidence contained in section %& of the 4vidence -ct tothe effect that no oral evidence will be admissible to contradict, vary, add orsubtract the terms of a written agreement unless the oral evidence comeswithin one of the exceptions or illustrations contained in the section0.

In Tindo- Besar estate "dn Bhd v Tin.ar Co #$%+% & 789 &&%states that ection %& specifically excludes evidence to contradict, vary, add to or

subtract from any of the terms of a contract in writing, except in any of thesituations spelled out in the provisos thereto0. "hese provisos are based on thecommon law

(ee 8nited *alayan Ban-in, Cor! Bhd v Tan ian 1en, #$%%6$ 789 &*$)

"he burden is on the party trying to adduce oral evidence.

+%u *ansor $ in B9Tra- "dn Bhd v Bin,-ul Tim%er +,encies "dnBhd #$%*% $ 789 $&' states that I am not unmindful of s %& of the 4vidence -ct $%56 wherein it will be for

the defendants to argue at the trial whether it will be open for them tocontradict or vary the written terms0.

(ee also Ponniah v Chinniah #$%$ 789 ; Perira /a%i% Ban- (*) Bhd vPener%itan +"+ "dn Bhd#$%%* 5 789 &%+).


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3ste7ce!tion# The vitiatin, factors# "he word vitiating or vitiate means ineffective or invalidate. ection %& proviso (a) provides that any fact may be proved which would invalidate any document or which

would entitle any person to any decree or order relating thereto, such asfraud, intimidation, illegality, want of due execution, want of capacity inany contracting party, the fact that it is wrongly dated, want or failure ofconsideration, or mista@e in fact or law0.

In Tan "ie /ee ' 0rs v /ii "ii 8n, #$%5 $ 789 :*5 the plaintiffclaimed the sum of D:,:5.66 on a promissory note signed by thedefendant which alleged a loan to the defendant by the plaintiffs. 2ralevidence of failure of consideration in a contract is admissible underproviso (a) of section %&.

In N" Narainan Pillay v The Netherlandsche /andel *aatscha!!i.#$%:' 789 &&+, 4dmonds 9 in his supporting udgement stated that

EIf one assumes that the document should be regarded prima facieas acontract, still proviso I would apply; according to which Fany fact may be

proved which would invalidate any documentor which would entitle anyperson to any decree or order relating thereto; such as fraud,intimidation, illegality, want of due execution, want of capacity in anycontracting party or failure of consideration or mista@e in fact or lawE0.

(ee also uthrie Wau,h Bhd v *alai!an *uthucumaru #$%+& $789 :5


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4nde7ce!tion# Collateral arranty#

ection %& proviso (b) provides the existence of any separate oral agreement, as to any matter on

which a document is silent and which is not inconsistent with itsterms, may be proved, and in considering whether or not thisproviso applies, the court shall have regard to the degree offormality of the document0.

"his proviso allows other evidence to be admitted when it is allegedthat the written agreement is not the entire agreement. "herefore theparties can prove that they entered into a distinct oral agreement onsome collateral (something additional or confirming, giving guarantee,

assurance, or security) matter.

In Tan "ee /oe Co td v +li /ussain Bros #$%*6 $ 789 *%,#$%*6 & 789 $, where the plaintiffs, the landlords of the premises,claimed vacant possession of the premises and alleged that thedefendants, the tenants, were in arrears (debt) of rent. Botice to quit

had been given. "he defendants alleged that they had paid the sum ofD $',666 to the landlords and claimed that they were entitled tooccupy the premises for as long as they wished on payment of rentregularly. "hey also alleged that the plaintiffs had refused to acceptthe arrears of rent. "he learned trial udge found as a fact that thedefendants had paid the sum of D $',666 to the plaintiffs.


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Tan Chon, ' "ons *otor Co ("dn) Bhd v +lan *c1ni,ht #$%*: $789 &&6, where in this case the respondent was a squadron leader in theRoyal -ustralian -ir ?orce. 1e wanted to buy a car and get the benefit ofexemption from duty in 7alaysia and -ustralia. 1e would have obtainedthe exemption if the motor car was ta@en out of 7alaysia and if itcomplied with the -ustralian Gesign Regulations.

"he learned trial udge found that there had been a warranty and this was

breached by the appellants. "here was clear evidence that had it not beenfor the promise of the salesman to deliver him a car complying with the-ustralian Gesign Regulations, the respondent would not have signed the3uyerCs 2rder.


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In 1luan, Wood Products "dn Bhd ' +nor v /on, eon,5inance Bhd ' +nor #$%%% $ 789 $%:, the ?ederal ourt said that

in considering whether this proviso applies, regard is to be had to thenature of the written agreement and its surrounding circumstances.Gepends on the bac@ground, nature or history of the agreements, themore formal the agreement the less ready the court will allow acollateral agreement to vary or contradict the written instrument.

In N, ay Choo *arion v o- ai 0i #$%%5 : 8R &&$, the courtdisallowed some oral term to be adduced in evidence (at page &&+)."he agreement has indeed a high degree of formality and clearlyindicates that the parties intended the agreement to contain a fulldescription of their respective rights and obligations. "he agreementwas drafted by a solicitor, on instructions from the respondent and allthe parties were fully aware of the alleged subect matter of the oralterms and if these had been agreed at that time they would have beenincorporated in the agreement.


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:rde7ce!tions# Condition !recedent#

ection %& proviso (c) provides

the existence of any separate oral agreementconstituting a condition precedent to the attaching of anyobligation under any such contract, grant or dispositionof property, may be proved0.

"his proviso stated that if the contract is incomplete,evidence of a prior agreement can help fill in what ismissing.

ondition precedent refers to an event or state of affairs

that is required before something else will occur.

In contract law a condition precedent is an event whichmust occur, before performance under a contract

becomes dueHHi.e., before any contractual duty arises.


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In anesan v Bas-eran #$%* & 789 &, where in thiscase the appellants had agreed to buy land belonging to therespondent and had paid a deposit of D &6,666>H. "here wasa restriction in the document of title that the land could not

be transferred without the consent of the Ruler in ouncil.Bo such consent was obtained but the respondent appliedfor the rescission of the contract and the forfeiture of thedeposit on the ground that the appellants had failed tocomplete the transaction and that time was of the essenceof the contract.

It was held (-ppeal allowed)! ($) the central question thatarose for determination in this case is whether therespondent did orally promise that he would obtain theconsent of the Ruler in ouncil necessary for the transfer."here was therefore an issue to be tried; (&) evidence

relating to the separate oral agreement is admissible underproviso (c) of section %& of the 4vidence -ct and theappellants should have been permitted to adduce evidenceto prove the existence of such a promise.

ee also Pym v Cam%ell 4 < 3 :+6.


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;the7ce!tion# Condition su%se


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=oo *in En v eon, Chun, 5att #$%*& & 789 &'$, wherein this case the respondent was the lessee of premises in JotaJinabalu. "he lease was in writing and registered inaccordance with section $6' of the abah 8and 2rdinance. Itprovided for the possibility of renewal by written request. "helease was for a period of $ years commencing on 9anuary $,$%5. -s the lease in this case was required to be in writing byvirtue of section $6' of the abah 8and 2rdinance and hasbeen registered in accordance with the 2rdinance, there is noway in which the respondentCs alleged agreement could beproved under proviso (d) to section %& of the 4vidence -ct.

In Teo "ie Pen, v uo- "in, 0n, #$%*: $ 789 $:&, thecourt has laid down the principle that where the terms of aninstrument are required by law to be reduced into writing thenno evidence of any oral agreement can be admitted inevidence.


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>the7ce!tion# Customs# ection %& proviso (e) provides that any usage or custom by which incidents not expressly mentioned in

any contract are usually annexed to contracts of that description may

be proved if the annexing of any such incident would not berepugnant to or inconsistent with the express terms of the contract0.

"his proviso provides that oral evidence is admissible to establisha trade usage to be annexed to the written contract but such usagemust be consistent with the terms and intention or meaning of thewritten contract.

Chen, 1en, /on, v overnment of 5ederation of *alaya#$% & 789 :: It was held that there was no custom as allegedthat if any wor@ was done according to the drawing which wasnot set out in the specification, extra payment would be made, assuch usage would be inconsistent with the contract, whichconsists of the tender, acceptance and other relevant documents0.

"mith v Welson #$:& : 3 < -d +& stated that where extrinsic evidence was given to show that a written

contract stating $666 rabbits actually means by local customs$&66 rabbits0.


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th e7ce!tion# /istorical %ac-round andsurroundin, circumstances

"he document historical bac@round and surroundingcircumstances that leads to its creation but cannot adduce prenegotiation transaction to discover the intention of the parties.

ee 1en, /uat 5ilm "6B v *a-hanlall (Pro!erties) Pte td#$%*' $ 789 &': cited Prenn v "immonds #$%+$ : -ll 4R&:+ and Phion, 1hon v Chonh Chai 5ah #$%+6 & 789 $$'.

In Prenn v "immonds #$%+$ : -ll 4R &:+, &'$ where ordWil%erforce had saidper curiamat page &'$ that, evidence of negotiations, or of the partiesC intentions ...

ought not to be received, and evidence should be restrictedto evidence of the factual bac@ground @nown to the parties ator before the date of the contract, including evidence of theCgenesisC and obectively the CaimC of the transaction0.

In Phion, 1hon v Chonh Chai 5ah #$%+6 & 789 $$', thecourt allowed extrinsic evidence to be given to help interpret thedocument. 4vidence of surrounding circumstances isadmissible.


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@the7ce!tion# Recital of contract#

In anam d6o Ra.amany v "omoo s6o "innah #$%*' &789 &%6, any agreements in written form include recitals inthe contract, which is different from the terms of contract. Ifthere is a dispute as to the instruments, can give extrinsicevidence. It is not prohibited to do so.

In the Arivy ouncil case of "ah al Chand v Indar.it#$*%%H$%66 &+ I- %: where it was held that (i) section %$ ofthe Indian 4vidence -ct (which is in the same terms withsection %& of our 4vidence -ct $%56) does notpreclude>prevent oral evidence to contradict a recital of fact

in a written contract and (ii) it is settled law that,notwithstanding an admission that the consideration has beenreceived, it is open to the vendor to prove that noconsideration has been actually paid.

Parol Evidence Rule (PER).ppt

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