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Gallen v Allstate Grain Co. (1984), 9 D.L.R. (4th) 496, 53 B.C.L.R. 38 (C.A.)

Facts:

Oral representation from A to G. G signed contract with A. Representation was wrong about grain crop

Issue(s):

Is the oral evidence admissible, and if so can it vary or contradict the signed contract?

Ratio:

Exceptions to parol evidence rule:
*To show contract was invalid bc of fraud, misrepresentation, mistake, incapacity, lack of consideration, or lack of contracting intention
*To dispel ambiguities, to establish a term implied by custom, or to demonstrate factual matrix of agreement
*In support of a claim for rectification
*To establish a condition precedent to the agreement
*To establish a collateral agreement
*In support of allegation that doc itself wasn’t intended by parties to be the whole agreement
*In support of a claim for equitable remedy
*In support of a blain in tort that oral statement was a breach of duty of care

Analysis:

When deciding if a warranty – it is a promise so it might be part of the contract, or might be collateral contract
**Look at intention – is it a promise or statement of fact

A collateral agreement cannot be established where it is inconsistent with or contradicts the written agreement (Hawrish)
**This principle is not absolute (Hawrish demonstrates this)
**Exception: if the contract is induced by an oral misrepresentation that is inconsistent with the written contract, the written contract cannot stand
**“Adding to” “subtracting from” “varying” – nothing wrong with that
***The statement is only when contradicts
**It is only a presumption in favour of written contract – it can be rebutted

Harmonious construction rule – the parties cannot have intended to agree to inconsistent obligations
**Rule only applies where both obligations have contractual force

Once it is established that the oral representation was a warranty then:
*The oral evidence is admissible
*Oral warranty and doc must be interpreted together
*If no contradiction then principle in Hawrish has no application
*If there is contradiction then just a strong presumption in favour of the written doc – the rule is not absolute

Holding:

Oral evidence is permissible bc the oral representation was a warranty before the K was signed

Comments:

It doesn’t matter whether it is part of the main contract (one contract analysis) or a separate collateral contract (2 contract analysis) the result should be the same regardless of the approach taken
**One contract – parol evidence doesn’t apply – bc it is considered the same contract
***If warranty is classified as a guarantee then you look at the one contract
**2 contract you have to go through the analysis above about Hawrish and the presumption


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