Surrounding Circumstances and Custom: Extrinsic Evidence in the Interpretation of Oil and Gas Industry Agreements in Alberta

Abstract

This paper discusses evidentiary issues that may arise in litigation concerning oil and gas industry agreements. The courts use the parol evidence rule to determine whether extrinsic evidence may be used as an aid to the interpretation of the agreement. Two exceptions to the rule are surrounding circumstances and custom. The paper explains the basis for these two exceptions, discovers the principles which have developed regarding their application in Alberta courts, and describes some of the difficulties which may be encountered in their application.