A Bird’s-Eye View of the Current State of the Law relating to the Interpretation of Contracts and the Slow Death of the Parol Evidence Rule

• Jurisdiction: South Africa
• Author: Conor Mcfadden,Daniel Hart,Johan Coertze
• DOI: 10.10520/ejc-btclq_v12_n4_a4
• Published date: 01 December 2021
• Date: 01 December 2021
• Pages: 18-24
• Published By: Siber Ink

18 © Siber ink

A Bird’s-Eye View of the

Current State of the Law

relating to the Interpretation

of Contracts and the Slow

Death of the Parol Evidence

Rule

JOHAN COERTZE* & DANIEL HART†

(Under the supervision of CONOR MCFADDEN‡)

ABSTRACT

The legal rules applicable to the interpretation of contracts and, more specifi-

cally, the rules regarding the admission of extrinsic evidence by a court when

tasked with the interpretation of a contractual provision, have undergone

substantial development over the preceding two decades, which develop-

ment came to a head in two recent judgments by the Supreme Court of

Appeal and the Constitutional Court.

This article explores how recent judgments have grappled with the

inherent conflict between the contemporary expansive approach to the inter-

pretation of contracts, one which permits the admission of extrinsic evidence,

and the more traditional approach which embraces the common-law parol

evidence rule and a reluctance to admit extrinsic evidence save in exceptional

circumstances.

The article then examines, firstly, the Constitutional Court’s judgment in

University of Johannesburg v Auckland Park Theological Seminary and Another

2021 (8) BCLR 807 (CC); 2021 (6) SA 1 (CC), where the court, in departing

from the earlier decisions of the SCA, held that a court should err in favour of

admitting all extrinsic evidence and that this approach would not effect the

application of the parol evidence rule.

Secondly, the article considers the manner in which the effect of this

judgment, specifically in relation to the parol evidence rule, was construed

by the Supreme Court of Appeal in the subsequent judgment of Capitec Bank

Holdings Limited and another v Coral Lagoon Investments 194 (Pty) Ltd and

others 2021 ZASCA 99.

The article concludes with a summary of the current state of the South

African law relating to the interpretation of contracts, and specifically the

approach to the admission of extrinsic evidence when a court is tasked with

interpreting a contractual provision.

* Associate, Corporate Commercial and Tax, Fasken.

†

Senior Associate, Corporate Commercial, Fasken.

‡ Partner, Corporate Commercial and Tax, Fasken.