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Parole Evidence Rule

  • Codefela
    • But beyond that mundane question of law there may be two specific but important errors of law.
    • The arbitrators may have erred in their use of the phrase “common understanding and intention of the parties”.
    • That suggests that they erred in searching for the subjective intentions of the parties.
    • That is an extremely important matter, not always well understood.
    • It is very well established in this Court, and indeed in other ultimate appellate courts, that the question is not what contracting parties subjectively intended, believed or understood.
    • The question is, subject to special common law or equitable rules usually based on error or disadvantage, what each party by words or conduct would have led a reasonable person in the position of the other party to believe.
    • A departure from these principles by arbitrators is a serious matter.
    • They are not principles merely reflective of some quaint minor guide to construction.
    • They go to central substantive conceptions of the law of contract in the Anglo-Australian common law.
    • A second respect in which the arbitrators may have erred is their seeming reliance on post-contractual events as a guide to contractual interpretation.
    • Some see that as more controversial, but it is a very important question of law.
1) [2011] HCA 37

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