The Parol Evidence Rule and the CISG: A Comparative Analysis

This paper will argue that globalisation of trade and hence the birth of international uniform laws has brought about changes in substantive law which need to be recognised by municipal systems. Specifically the parol evidence rule in common law will be put increasingly under pressure. It is argued that the sacred cows of common law namely the inadmissibility of evidence of a pre-contractual nature and hence the subjective intent of parties are outdated and change is required. As Lord Steyn in an address to the University of Sydney pointed out; the common law is possibly swimming against the tide. However changes are needed specially the inclusion and admissibility of subsequent conduct. The CISG has recognised that business people do not understand rules which exclude considerations on how the parties interpret their contracts. This paper will highlight that contracts are based on bargain and exchange. The classical theory which suggests that contracts for a homogenous product, concluded between two strangers who transact in a perfect spot market is outdated and wrong. As a result of the conflict between article 8 of the CISG and the parol evidence rule the outcome of litigation will yield possibly a different result as seen in recent US cases such as in MCC-Marble Ceramic Center Inc v Ceramica Nuova D'Agostino, SPA. However it is recognised that the common law has tools, such as rectification, which will bring about similar results as under the CISG. The time has come for the common law to slowly change and embrace international trends