Implications of the parol evidence rule on the interpretation and drafting of contracts in South Africa

LL.M. (Law of Contract)The parol evidence rule encompasses those rules that regulate the admissibility of extrinsic evidence. The parol evidence rule only comes into play when the court has to interpret a written contract and one of the parties argue that the contract or any specific clause does not reflect the common intention between the parties. The court will then follow a two prong approach in interpreting the contract. The court will firstly utilise the rules of interpretation, including the common law principles regarding presumptions. If this does not clarify the disputed clauses of the contract, the court will then rule on whether extrinsic evidence is permissible and consider such extrinsic evidence in an attempt to determine the common intention of the parties. The rules applicable to the admissibility of extrinsic evidence in the South African law of contract developed from a strict formalistic approach as applied in the Delmas Milling v Du Plessis case to an approach where any extrinsic evidence may be admitted, as long as it is admissible in terms of the rules of evidence and it falls within the category of what Harms DP stated in the KPMG Chartered Accountants (SA) v Securefin Ltd case as “context” or “factual matrix”. The KPMG Chartered Accountants (SA) v Securefin Ltd case finally brought the law applicable to the parol evidence rule in the South African law of contract on par with its American and English counterparts