From: Lionel Smith, Prof. <lionel.smith@mcgill.ca>
To: Harrington Matthew P. <matthew.p.harrington@umontreal.ca>
CC: obligations@uwo.ca
Date: 05/03/2019 12:43:22 UTC
Subject: Re: Parol evidence rule apply to shareholder resolutions?
Attachments: ISTL.png
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

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