From: Robert Stevens <robert.stevens@law.ox.ac.uk>
To: Lionel Smith, Prof. <lionel.smith@mcgill.ca>
Harrington Matthew P. <matthew.p.harrington@umontreal.ca>
CC: obligations@uwo.ca
Date: 05/03/2019 13:02:28 UTC
Subject: Re: Parol evidence rule apply to shareholder resolutions?

It depends what you think "rectification" allows you to do.


So, at common law q contract is found in an objectively manifested offer and acceptance between two parties. it is not found in the subjective intentions of two persons even where they coincide.


So, if we 'rectify' a written document that does not (usually because of a slip) reflect what the parties had actually agreed, what do we then give effect to?


My view is that rectification operates as a kind of partial rescission. We tear up the agreement that the document alone represents their entire agreement, and give effect to the agreement (the objective offer and acceptance) that there would be absent that. But we're still giving effect to an objectively manifested offer and acceptance, not to the parties' subjective intentions, as only the former is an agreement. If rectification were about giving effect to subjective intentions as some seem to think, why is it a doctine confined to documents? If we can give effect tot the parties' subjective intentions, why generally have objective offer and acceptance as a necessary condition?


Similarly, rectification of a trust deed is possible. We give effect to the trust that there would be absent the reduction to a single document.


Rectification of wills, at common law, is not however possible. There is no informal will to give effect to, and the testator's subjective intentions are not a will. Legislation can alter this because it can determine what a will "is." Reectification of court judgments should be similarly narrow.


The position in civil law may (indeed I suspect is) different because of a different conception of what it is we are giving effect to. If you think, following the will theory, that contracts bind because that is what the parties subjectively will, then there is no need for a doctrine of rectification. We just find out what the parties subjectively intend and give effect to that. So you don't need it.


I think one legal tradition is getting this right, the other wrong.

From: Lionel Smith, Prof. <lionel.smith@mcgill.ca>
Sent: 05 March 2019 12:43:22
To: Harrington Matthew P.
Cc: obligations@uwo.ca
Subject: Re: Parol evidence rule apply to shareholder resolutions? 
 
Although the civil law does not know rectification by that name, it has a category of juridical act, which can be defined as a “manifestation of intention on the part of one or more persons with a view to producing legal effect.” Every contract is a juridical act, but so is a will, a contractual offer, or the acceptance of a contractual offer.
Although the common law does not (yet) have the category of juridical act, it actually allows, in my view, rectification of any juridical act, since it allows rectification of a trust deed, potentially of a will (though this is complicated by formalities issues and some statutory intervention), and of the judgment of a court.
So on this view, the answer is that a shareholder resolution should be subject to rectification. Note that on the traditional view this means that the text of a document recording the resolution is subject to rectification. The exercise does not change what was done; it changes the record to comply with what was actually done.
As to the parol evidence rule, I am no expert but I think that even where the rule is strictly applied, an application for rectification must necessarily stand as an exception or it could never get off the ground. So too with wills, to take ip Robert Stevens’ point: if the allegation is that my formally correct will was made while a gun was pointed at me, that evidence can be evaluated and the will impugned if the evidence is accepted. In that context this comes out as the traditional distinction between the court ‘sitting as a court of probate’, ie deciding whether a document is a will (where the gun-pointing claim could be assessed), and ‘sitting as a court of construction’ which is logically afterwards and involves construing the document that has been proved to be a will (at which stage parol evidence is not admissible). Even if it is only implicitly done, I think we need to draw the same distinction for contracts and other juridical acts recorded in writing: you can’t construe the writing until you know what it says, and a claim for rectification goes to that quesiton.
Lionel


On Mar 5, 2019, at 07:01, Harrington Matthew P. <matthew.p.harrington@umontreal.ca> wrote:

That's exactly what I wondered aloud in class. That is I suppose why we were unsure.

On Mar 5, 2019 02:04, "Tettenborn A.M." <a.m.tettenborn@swansea.ac.uk> wrote:

Is a shareholder resolution a contract?

Andrew


On 04/03/2019 23:58, Gerard Sadlier wrote:
Dear Mat

Without wishing to be pedantic, do we think that the parole evidence
rule could in reality be relied on to keep an oral agreement out if
this was a traditional contract? I'm far from sure one could.

Kind regards

Ger

On 3/4/19, Harrington Matthew P. <matthew.p.harrington@umontreal.ca> wrote:

Dear Colleagues:

A student posed an interesting question today:

Assume shareholders passed a resolution, (to reallocate shares or change
share classes).  Assume that the board then did something else on the
grounds that this other thing was discussed but not included in the actual
resolution.  I.e., this is what we really meant...

Can the shareholders rely on the parol evidence rule to keep out evidence of
these other discussions and enforce the resolution as written?

In short, would the parol evidence rule apply to a shareholder resolution or
does it apply only to traditional contracts?

I want to say yes but don’t have any case for saying so.

Am I right?

Any thoughts greatly appreciated.

Thanks
Matt

---------------------------------
Matthew P Harrington
Professeur
Faculté de droit
Université de Montréal
www.commonlaw.umontreal.ca
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