Abstract
LL.M. (Banking Law)
The parol evidence rule applies to contracts where the agreement between the parties has been integrated into a single and complete written memorial. The theoretical foundation of the parol evidence rule lies in the purported fact that the parties have integrated their agreement in a document that is a full and final crystallisation of their consensus. Extrinsic evidence such as evidence of prior negotiations and antecedent contracts is therefore deemed irrelevant and misleading. Admission of prior negotiations and antecedent contracts is, however, an instrumental tool which can assist the courts in determining the true nature of a commercial transaction between the contracting parties.
This dissertation seeks to explore the relationship between contract law and commercial practice and, more specifically, the parol evidence rule in the interpretation of contracts and the utilization of the concept of commercial expectations of the parties to a contract in the interpretation of contracts. The further aim of this dissertation is to explore the reconcilability or irreconcilability of the principles of interpretation utilised by the courts with the expectations of commercial practice.
A comparative study will be undertaken between the South African Law of contract and the Canadian Law of contract. The relevant case law in each jurisdiction will be discussed and attempts will be made to analyse the similarities and disparities between the two jurisdictions. Ultimately, this dissertation seeks to answer this question: Does the parol evidence rule hinder or advance the commercial expectations of contracting parties in South Africa and Canada?
This dissertation found that efforts have been made by the South African courts to curb the damage that may arise due to strict implementation of the parol evidence rule by moving away from the strict formalistic approach to the interpretation of contracts by adopting a more contextual approach.
The Canadian courts have over the years developed and adopted rules which are geared towards mitigating the harm that may result from a strict interpretation and thereby hinder the commercial expectations of contracting parties in Canada.