contract interpretation

Question 1

basic principle

Answer 1

The meaning of a contract term is what a reasonable person with the background knowledge reasonably available to the parties would understand.

What contextual information can be considered?
How much weight should the context carry compared to the plain meaning of the words?

Question 2

textualists

Answer 2

• more weight on the conventional natural meaning of the words

Question 3

contextualist

Answer 3

• more weight on the background circumstances, purposes and commercial common sense

Question 4

what kinds of context count?

Answer 4

Context includes anything that would affect how a reasonable person understands the language, as long as:

It was reasonably available to the parties.
It does not include pre-contractual negotiations (exception).
Key Case: Investors Compensation Scheme Ltd v West Bromwich Building Society (1998), per Lord Hoffmann

Question 5

Front:
How does context weigh against the conventional meaning in interpreting contract terms?

Answer 5

The court balances context and wording, considering nature, formality, and drafting quality (Wood v Capita, per Lord Hodge).
Poor drafting reduces reliance on semantics; courts avoid attributing improbable or unbusinesslike intentions (Mitsui Construction v A-G of Hong Kong, per Lord Bridge).