eBusiness Weekly
Arthur Marara
This week we continue with exceptions to the Parol Evidence Rule. If you missed the other article a fortnight ago you can read it from eBusiness Weekly website or its social media platforms.
The Parole evidence further does not apply in the following instances;
(c) It does not apply 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 the ground of invalidity of a contract eg 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 it has to be in writing and signed. Any such 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 that no indulgence made by the party can be taken to be waiver of his rights.
The Supreme Court considered this issue in the case of AFC v Pocock 1986 (2) ZLR 229 — SC 135/96. P borrowed some money from AFC. According to the contract AFC could come any time and sell the farm in the event of falling into arrears.
The contract had a non-variation and non-waiver clause. P 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 P would register a stop order.
After that agreement P was surprised to receive a letter from AFC threatening that it would move in and sell the property. P 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. P argued further that the oral agreement constituted a waiver by AFC of its rights in terms of the contract.
P further tried to argue that AFC should be stopped from denying the existence of the oral agreement with its General Manager. P’s arguments were rejected by the court which ruled in favour of AFC.
At page 236 the court said: — Gubbay CJ ( as he then was) , “I am satisfied therefore, that the respondent cannon 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 which might otherwise give rise to estoppels may not be taken by him to be such conduct.”
The Application of Parole Evidence Rule in Maparanyanga v The Sheriff SC/32/02 – ZLR 2003 (1) 325 (S)
The Sheriff entered into a written standard form agreement with the purchaser after purchaser had offered to purchase the debtor’s property by private treaty. The purchaser’s offer had conditions of payment different from those in the standard form. The standard form provided for the full purchase price to be paid on signature thereof.
However, both parties regarded themselves as being bund by the terms of payment set out in the written offer made by purchaser and accepted by the Sheriff.
The High court concluded that although the standard form of contract did not reflect the terms of the agreement between the parties, that form had been signed merely as a formality that was required by the practice in the Sheriff’s office.
The parties were well aware of the conditions of the sale that had been agreed upon between them and those conditions were observed on appeal by Maparanyanga.
The Supreme Court set aside the order granted by the High Court. One of the reasons given by the Supreme Court for setting aside the order was that it did not regard the standard form of agreement of the dale to be inferior to, or less binding than any other contract properly entered into by the contracting parties.
The court went on to state that it was satisfied that the consequences of disregarding a material term of such contract were lot more drastic than as suggested by the High Court.
The Sheriff denied breaching the agreement. His evidence was that the standard form did not record accurately the agreed terms of the contract. This is also supported by the offer made by the purchaser which culminated in the signing of the agreement.
The offer did not state that full payment will be made upon the signing of the agreement. Other contemporaneous documents may be looked to when the written contract is only one part of a larger transaction.
The offer made had to be seriously considered to determine the correct terms of the contract.
See Menashe v Georgiadis. The purchaser and the Sheriff were agreed as to the true nature of the terms.
It was not intended to contain the whole contract between the parties. See Avis v Verseput.
In its decision at page 12 of cyclostyled judgments, the Supreme Court stated “… from a contractual point of view, having signed such a contract, both parties were bound and obliged to adhere to its terms”. You can read more from the judgment itself.
LEGAL DISCLAIMER: The material contained in this post 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 post. 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 practicing law in Harare, Zimbabwe. He is also a notary public and conveyancer.
