Contract - Construction

Question 1

ICS case

Answer 1

Identified 5 principles necessary when construing terms. 1) meaning conveyed by wording is that of a reasonable person having the background knowledge available to the parties at the time the contract was made. 2) background knowledge might include anything that could affect the judgment of the reasonable person. 3) prior negotiations and expressions of subjective intention or not admissable, 4) meaning conveyed to the reasonable person may not mean the same as the words themselves (possible to conclude that worded incorrectly) 5) if concluded wrongly worded, law does not require judges to attribute to the parties an intention which they plainly could not have had. Impact of increased costs, uncertainty and criticisms of judicial rewriting not interpretation.

Question 2

Prenn v Simmonds

Answer 2

Commercially sensible construction - enquire beyond language - but given natural meaning in the context of contract as a whole.

Question 3

Chartwell

Answer 3

Pre contract negotiations excluded as drenched in subjectivity

Question 4

Houghton v Trafalgar Insurance

Answer 4

Strict approach with ambiguities - only enforceable if exact damage caused covered by wording. “load” referred to goods not people.

Question 5

Wallis Sons & Wells v Pratt

Answer 5

Seeds that were rubbish 0 breach of condition that they were fit for purpose / matched discription.

Question 6

Ailsa Craig

Answer 6

Limitation clauses have had a more relaxed approach as some liability is being accepted

Question 7

Canada Steamships v The King

Answer 7

Exclusion Negligence Liability.

3 rules of construction 1) if clause contains language expressly exempting party from effects of own negligence then effect must be given to it. 2) where no such words are used, must consider if words in original meaning can cover negligence 3) if words could cover liability other than negligence, clause will be confined to that liability and not negligence

Question 8

Alderslade

Answer 8

If only possible liability covered by a clause is negligence, liability for it may be excluded even if it is not specifically mentioned or included by the phrasing. Otherwise the clause would be redundant.

Question 9

Suisse Atlantique

Answer 9

In absence of clear words, exclusion clauses would not be applied to breaches which tended to defeat the main purpose of the contract. Clearly worded would exclude liability even if breach was fundamental. Confirmed in Photo Productions Ltd.