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Gordon v Macgregor

(1909) 8 CLR 316, High Court of Australia

Overview

This case considered the scope of the parol evidence rule; that is, the rule that provides that where a written contract contains all the terms then oral evidence cannot be given of other terms.

In this case a written contract followed verbal negotiations. The Court held that once oral negotiations are reduced to writing there is a presumption that it contains all the terms of the contarct. The rule prohibiting the introduction of parol evidence then applies. In this case there was nothing to displace that presumption that the written document evidenced the whole of the contract. 

Wood logs

 

Facts

Following verbal negotiations Gordon entered into a written agreement with Macgregor requiring Gordon to supply dark red cedar logs to Macgregor. The document specified, in part, that logs should be from 10 - 15 feet, averaging 12 feet 6 inches in length with an average girth of 10 ft 6 and that a minimum quantity was to be delivered every three months.

Gordon failed to deliver to these specifications and Macgregor claimed damages. Gordon claimed that the contract did not comply with the Statute of Frauds (which required this contract to be recorded in writing) because it did not record two essential terms agreed by the parties:

  • that delivery was to commence three months after the contract date;
  • that the minimum girth was to be 6 feet.

 

Trial

Gordon succeeded. The trial judge

'... found as a fact that it was a term of the agreement between the parties that the delivery should not commence for a period of three months.' (from the Judgment of Griffith CJ)

The trial judge also found that there was an oral term regarding minimum girth of the logs.

 

Supreme Court of Queensland (Full Court)

Macgregor succeeded. Although the majority considered that there was some basis upon which the trial judge could have found the existence of the alleged oral term (the Chief Justice, dissenting on this point, considered there was no such evidence), they did not consider it fair for the defendant tor raise it in these proceedings given his previous denials of such a term. All judges on appeal found that there was no evidence to support the trial judge's finding that there was an oral term as to girth.

 

Held

Chief Justice Griffith

Chief Justice Griffith quoted the general rule as expressed by Maule J in Harnor v. Groves that:

Where a contract, though completely entered into by parol, is afterwards reduced into writing, we must look at that, and at that alone ... It is by the written contract alone ... that the parties are bound. ....

His Honour thought this was

sufficient to dispose of the case. The defendant could only controvert this position by showing that the written document was not intended to embody the whole contract.

His Honour noted that the claim of non compliance with the Statute of Frauds was

... founded upon a suggestion that in respect of two matters the written agreement did not embody all the terms agreed upon between the parties. One of them was as to the time when the deliveries under the contract were to commence. On that point the agreement was silent, and I construe it as meaning that they were to commence within a reasonable time. ...

His Honour did not consider there was admissible evidence to demonstrate a such a term.

In relation to the alleged term regarding girth, his Honour agreed with the Full Court that there was no evidence to support such a finding.

Appeal denied.

Justice O'Connor

Agreed with the Chief Justice.

Justice Isaacs

His Honour agreed with the Chief Justice and added some further comments. He noted that he considered it:

... an almost irresistible presumption that the parties agreed that [the written agreement] should be the record of their bargain, and I can find no scrap of evidence to displace that presumption, and, therefore, I say it matters under the circumstances of this case not at all whether there was evidence as to the girth and as to the time. The rule in many cases has been affirmed over and over again. ...

His Honour referred to a number of authorities which hold that, where oral negotiations are reduced to writing, the writing constitutes the contract, subject to one qualification, as wet out by Baron Bramwell in Wake v Harrop:

It should be borne in mind that a written contract, not under seal, is not the contract itself, but only evidence - the record of the contract. When the parties have recorded their contract, the rule is that they cannot alter or vary it by parol evidence. They put on paper what is to bind them, and so make the written document conclusive evidence between them. But it is always open to the parties to show whether or not the written document is the binding record of the contract.

His Honour accepted, therefore, that the prima facie presumption is that the written document is a ‘binding record of the contract’. Once established, the rule prohibiting the introduction of parol evidence applies.  He thought it was best enumerated in Inglis v. John Buttery where Lord Blackburn said:

I think it is quite fixed … that where parties agree to embody, and do actually embody, their contract in a formal written deed, then in determining what the contract really was and really meant, a Court must look to the formal deed and to that deed alone. That is only carrying out the will of the parties. [The reason for reducing the agreement in writing is to supersede all preliminary negotiations and eliminate possibility of misunderstandings]. The very purpose of a formal contract is to put an end to the disputes which would inevitably arise if the matter were left upon verbal negotiations …. The written contract is that which is to be appealed to by both parties, however different it may be from their previous demands or stipulations, …. There can be no doubt that this is the general rule, …

To escape the effect of a document in those circumstances it would be necessary to demonstrate some sort of fraud or mistake - but neither were present here.  The written document applied..