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Implied Term of Contract

Parol Evidence

Law and Sea.
Law Quotes: PROOF

Outside of region of mathematics, proof is never anything more than probability, by Lord Guthrie in Nobel’s Explosive Co. v British Dominions General Insurance Co. [1918] SLT 205 at 206.
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Extrinsic evidence of Custom and Usage
Last updated: 21-Jun-2015

Hutton v Warren (1836) 1 M & W 466 at 475 per Parke B:

It has long been settled, that, in commercial transactions, extrinsic evidence of custom and usage is admissible to annex incidents to written contracts, in matters with respect to which they are silent. The same rule has also been applied to contracts in other transactions of life, in which known usages have been established and prevailed; and this has been done upon the principle of presumption that, in such transactions, the parties did not mean to express in writing the whole of the contract by which they intended to be bound, but a contract with reference to those known usages.

Per Lord Wright in Reardon Smith Lines Ltd v Black Sea and Baltic General Insurance Co Ltd (The Indian City), [1939] 3 All ER 444 at pp.447-448:

… the ascertainment or identification of what was a usual and reasonable route depended on evidence, since the court, not being possessed by itself of expert navigational or mercantile knowledge, must, if need be, call in aid such evidence. This is not because the contract is ambiguous, but simply because it does not write out in full what the parties are assumed to know or to be able to ascertain. It is only an instance of the familiar rule that evidence is admissible, not of the parties’ intention, but of the surrounding circumstances, in order to identify what the parties were contracting about and to identify the subject-matter of the contract. Such evidence must not contradict any express term of the contract. For example, if it had been stipulated that the vessel should not call at Constantza, the evidence would have been inadmissible. Where, however, as here, there is no such inconsistency between the evidence and the document, the evidence is not merely competent, but may be necessary if the court is to give effect to the contract. The general rule is that stated by Blackburn J, in Grant v Grant (1870) LTR 5 CP 727, at p 728:

The general rule seems to be, that all facts are admissible which tend to show the sense the words bear with reference to the surrounding circumstances of and concerning which the words were used, but that such facts as only tend to show that the writer intended to use words bearing a particular sense are to be rejected.

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