Contract Law: Parol Evidence Douglas Wilhelm Harder, M.Math. LEL Department of Electrical and Computer Engineering University of Waterloo Waterloo, Ontario, Canada ece.uwaterloo.ca © 2013 by Douglas Wilhelm Harder. Some rights reserved.

Outline An introduction to the engineering profession, including: –Standards and safety –Law: Charter of Rights and Freedoms, contracts, torts, negligent malpractice, forms of carrying on business –Intellectual property (patents, trade marks, copyrights and industrial designs) –Professional practice Professional Engineers Act Professional misconduct and sexual harassment –Alternative dispute resolution –Labour Relations and Employment Law –Environmental Law 2 Parol Evidence Rule

The Contract as a Starting Point When a contract is established, this becomes the entire basis for any future interpretation of the benefits and obligations of the parties –If a term is included in the contract, it is assumed it was agreed upon by all parties –If something is left out of the contract, it is assumed that that all parties agreed to such an omission Any discussions, communications, letters of intent, etc. prepared prior to the contract, in general, cannot be used in any way to interpret the contract Parol Evidence Rule 3

The doctrine that the contract forms a common basis for the agreement is known as the parol evidence rule This doctrine prevents any party to a written contract from presenting past (usually oral) evidence that contradicts or adds to the terms of a contract that appears to be “whole” The word parol means speech or agument from Anglo-Normal cf. the French verb parler Parol Evidence Rule 4

While we will discuss many exceptions to the parol evidence rule, you must realize that these are all relatively special cases Do not let the myriad of exceptions to this rule suggest that courts do not apply this rule for the vast majority of contracts Parol Evidence Rule 5

Exceptions In general, evidence from communications prior to the establishment of the contract fall into one of three categories: 1.To demonstrate that no contract ever existed 2.In the interpretation of ambiguities 3.As a question of equity We’ll look at a few cases Parol Evidence Rule 6

What was Intended In Bacchus Marsh Concentrated Milk Co Ltd v Joseph Nathan and Co, 1919, equity allowed a correction (“rectification”) of a written agreement “with what one party intended and the other party knew the first intended.” Parol Evidence Rule 7

Intent to Enter into a Contract Prior oral evidence was used to demonstrate in Pym v Campbell, 1865, that there was no intention to enter into a contract unless the invention was inspected and approved by two engineers Parol Evidence Rule 8

Wrongful Purpose To demonstrate conduct such as –Misrepresentation –Fraud –Duress –Unconscionability –Illegal purpose For example, consideration must have some other purpose other than evading taxes Parol Evidence Rule 9

When the Rule Applies In Hospital Products Limited v United States Surgical Corporation, 1984, parol evidence was used to show that the written document is only part of the contract State Rail Authority of NSW v Heath Outdoor Pty Ltd., 1986, found, however, that the parol evidence rule only applies once it has been determined the entire contract is in writing: “The existence of writing which appears to represent a written contract between the parties is no more than an evidentiary foundation for a conclusion that the agreement is wholly in writing.” Parol Evidence Rule 10

References [1]D.L. Marston, Law for Professional Engineers, 4th Ed., McGraw Hill, [2]Julie Vale, ECE 290 Course Notes, [3] Wikipedia, These course slides are provided for the ECE 290 class. The material in it reflects Douglas Harder’s best judgment in light of the information available to him at the time of preparation. Any reliance on these course slides by any party for any other purpose are the responsibility of such parties. Douglas W. Harder accepts no responsibility for damages, if any, suffered by any party as a result of decisions made or actions based on these course slides for any other purpose than that for which it was intended. 11 Parol Evidence Rule