I recall some years ago a senor banker said to me, very smugly, that “Our previous verbal agreements with your client are not worth the paper they are written on.”

Was the banker legally right in his statement? Yes, he was. The parol evidence rule prevents the introduction of evidence of prior or contemporaneous negotiations and agreements that contradict, modify, or vary the contractual terms of a written contract when the written contract is intended to be a complete and final expression of the parties’ agreement.

The Irish Courts have consistently applied the parol rule in the many cases that have come before it in recent years.

What prompted me to make this particular posting was a meeting with a client yesterday who had been told by his Relationship Manager that the bank “would deal with him fairly” once he had sold all of the properties that the bank had a charge on. My client was upset to find that after he had sold all of the properties, that the bank had refused very generous settlement offers (funded by a third party) and were now intent on obtaining judgment against him in respect of the residual debt, with a very aggressive firm of solicitors involved. Unfortunately, he is one of many clients who had been given similar assurances.

Our firm advice in any case involving re-structuring of bank debt is to insist on a written settlement agreement before disposing of any assets. In some cases, the best way to proceed is by way of using a Personal Insolvency Arrangement, particularly if the mortgage on the family home was either in arrears at 1 January 2015 or had been re-structured prior to that date, as Section 115A of the Personal Insolvency Act 2012 could be utilised to “cram down” the debt.

If any of your clients require advice on negotiating settlements with banks and/or vulture funds, please contact myself or Tom Murray