Bank of Australasia v Palmer – Case Summary

Bank of Australasia v Palmer

Privy Council (Australia)

Citations: [1897] AC 540.


The claimant made an oral agreement with the defendant, a bank. The agreement allowed him to draw down cheques on overdraft or credit. The defendant allegedly breached this agreement by dishonouring a cheque.

The defendant relied on a written document which the claimant signed after the agreement was made. The terms of this document were not the same as the terms the parties had previously agreed. The claimant had pointed out some of the discrepancies when he signed the document, but the defendant had assured him the deal would work as the parties had orally agreed.

The defendant argued that the parol evidence rule prevented the claimant from admitting evidence of the parties’ oral conversations to contradict the written document.

  1. Was the evidence of an oral agreement admissible in this case?

The Privy Council held in favour of the claimant. The parol evidence rule did not apply in this case. The document did not purport to be the parties’ agreement. At most, it was an inaccurate memorandum of a separate agreement. External evidence was admissible to demonstrate these inaccuracies.

This Case is Authority For…

Normally, the ‘parol evidence’ rule prevents parties from admitting oral or external evidence in court which contradicts or varies a written agreement. The rule does not apply where the written document does not purport to be the parties’ agreement.