PROOF OF TERMS OF A

CONTRACT
THE PAROL EVIDENCE RULE
Burden
● S.109 Evidence Act (Cap 80)
● Carried by the person asserting the existence of a
state of facts (unless the law places the burden on a
particular person)
THE PROBLEM
EXPRESS TERMS
A written contract exists but one party claims the
document does not contain the whole contract; and
that there are other terms that were agreed on orally
or contained in another document.
Written Contracts:
The Parol Evidence Rule
If a contract is written, the writing is the whole contract; Oral
or extrinsic evidence cannot be admitted to add, vary or
contradict the terms of a written agreement
Reasons:
● Allowing additions would result in uncertainty – the rule
enhances predictability
● Writing demonstrates intention to capture entire contract in
a document
PROBLEM: many agreements are partly written and partly
oral. Exceptions therefore developed.
Exceptions to the Rule
1. Rectification
Webster v Cecil
● Webster was buying land from Cecil. The written
contract showed a price of 1,250. Cecil showed he
had rejected an offer for 2,000.
He was allowed to adduce evidence to show the correct
price was 2,250
NB: Rectification is an equitable remedy
2. Fulfillment of a specified event
Pym v Campbell
● Agreement for purchase of a share of a patent
● The parties had orally agreed that the contract would
not be effective until a 3rd party had examined the
patent (condition precedent)
● Defendant was allowed to adduce the evidence about
the condition
3. Custom or Trade Usage
Hillas v Arcos

4. Mistake, Misrepresentation
A party may be allowed to adduce evidence to avoid
his liability under the contract.
This evidence goes to show there were defects at the
contract formation stage.
5. Contract is partly written / partly oral
J Evans & Sons v Andrea Merzario
NB: The parol evidence rule does not apply because the
agreement is not wholly in writing
● Defendant used to carry Plaintiffs machinery from Italy.
They were carried below deck to prevent rusting.
Defendants started using containers & plaintiff sought
oral assurance that practice would continue
● They were told machinery would be carried below deck
● The written contract gave defendants discretion to
choose how the cargo would be handled and transported
● One was left on board and fell overboard while at sea
● HELD: they could introduce the evidence.
● Contract was partly written, partly oral
● Denning: Collateral contract
7. Collateral Contracts
City & Westminster Properties
● Δ rented a shop and the adjoining room which he slept in
● Π (landlord) inserted a new clause restricting the use of
the rooms to work only
● He gained an oral assurance that he could still sleep
there before he signed the lease
● The tenant would not have signed the lease without that
assurance.
● They sued him for breach of the provisions
● HELD: he had breached the provisions BUT they could
not enforce the provision against him because of the
collateral contract
● The oral promise was treated as a separate contract
8. Evidence of the parties
● 9. As an aid to construction of the contract: to
clarify ambiguities in the contract
● 10. To demonstrate that the parties have capacity

● NB: see Part 6 – Evidence Act, Cap 80 Laws of Kenya

The Entire Agreement Clause
● Also referred to as a merger clause or an integration
clause
● It prevents a party from claiming that a written
document does not contain the entire agreement
● It states that the contract is a purely written
agreement to which the parol evidence rule applies
such that no extrinsic evidence should be adduced
RELATIVE SIGNIFICANCE OF TERMS
1. CONDITIONS
● Terms which are so essential that they go to the root of
the contract
● Failure to perform renders the contract meaningless
● The court grants the injured party a wide range of
remedies – can repudiate the contract AND sue for
damages.
The Mihalis Angelos [1970] 3 WLR 601
Failure to avail a ship for loading on a particular date
amounted to breach of a condition
Rationale: Need for commercial certainty
Distinguish: Contigent conditions
● Condition precedent: a requirement that a certain
state of affairs should exist before contractual liability
attaches
See Pym v Campbell (examination of the patent)
● Condition subsequent: a stipulation that the
occurrence of certain events will cause the contract to
cease to exist
2. Warranties
● Minor or less important terms
● Contract can continue even where they are breached
● Secondary to the purpose of the contract
● The only remedy for their breach is damages
Bettini v Gye (1876)

● Contract required Alesandro Bettini to appear for rehearsals 6 days

to his performance.
● It also contained a RC barring him from singing anywhere within
50 miles of London (except in the Royal opera house).
● He was unwell and failed to attend the rehearsals as required.
● He showed up ready to perform on the opera but was fired and
replaced.
● Issue: whether his failure to turn up at rehearsals amounted to a
breach of condition
● HELD: It was a breach of warranty (not condition)
● Cf. Poussard v Spiers & Pond
3. Innominate Terms
● It is hard to determine whether a term is a condition
or a warranty
● Courts began to describe some terms as innominate
meaning they had no classification.
● They would then determine the consequence of the
breach in determining a remedy
● The court assesses the importance of the term to the
contract as a whole
Hong Kong Fir Shipping Co. Ltd v Kawasaki
Kisen Kaisha
● Δ chartered a ship from Π. The ship was to be fitted for
ordinary cargo service
● Engine room broke down and the Δ lost 18 weeks use of
the ship.
● They wanted to repudiate the contract
● Claimants argued the term was simply a warranty
allowing them only damages
Held: they were only entitled to damages. The appropriate
remedy can only be determined after the consequences of
the breach have been identified.
NB: has been upheld in subsequent cases – Tradax Case