Contractual Interpretation Flashcards

Question

Lord Hoffman in ICS v West Brom (1998)

Answer 1

The meaning which a document would convey to a reasonable man is not the same thing as the meaning of its words. the meaning of the document is hat the parties using those words against the relevant background would reasonably have understood them to mean. Bacground may enable a reasonable man not just to choose between possible meanings of ambiguous words, but even to conlcude parties must have used the wrong words or syntax Rule that words should be ven their natural and ordinary emaning reflects common sense position that we do not easily accept that people have made liguistic mistakes, OTOH, if we would neverthless conslude from background that something must have gone wrong w the language, th law does not require judges to attribute to the parities an intention which they plainly oculd nothave had

Answer 2

“if detailed semantic and syntactical analysis of words in a commercial contract is going to lead to a conclusion that flouts business commonsense, it must be made to yield to business common sense.”

Answer 3

Contract says that "If the Contractor commits a breach of any of its obligations under the contract..." The council may terminate Council seeks to terminate for minor breach Words cannot mean what they say, this is a four year contract, would be absurd to terminate for minor errors in mowing the lawn CA agreed, said it must have meant "repudiatory breach" But you can already teminate for a repudiatory breach, why even include the clause if that what they meant? heavily criticised case

Answer 4

Contract said employees release all calims but those under the pension scheme, so cant recover for damage to their employment prospects having worked for fraudulent BCCI HL said no This is a release - which are interpreted strictly. Parties could not have intended to release a claim of which they were not aware But counter-argument that settlements are supposed to cover every eventuality Alternative argument offered that what clause purports to do is settle all claims of a certain nature. Employees made deposits w bank, couldnt exclude this claim eg. Could restrict clause to mean all claim rising out of employment relationship. Or restrict even further to claims arising out of termination of employment contract Can then cover claim of unemployability as result of fraud Court is twisting meaning of words, but are enabled to do so because the literal contstruction of the words cannot ahve been meant. But this allows court to change eaning to whatever

Answer 5

Additional resideintial payment was expressed to be: “23.4% of the price achieved for each residential unit in excess of the minimum guaranteed residential unit value less the costs and incentives.” Chartbrook interptes as: ARP = 23.4% x (PA – (MGRUV + C & I)) Persimmon interprets as: ARP = (23.4% x (PA – C & I)) - MGRUV What parties receive is reasonably clear though not very well drafted Persimmon argues different meaning, different from actual words used (whcih couldn't be meant, running the figures shows it makes no commercial sense) HL agreed. Can substantially change the words to better reflect parties' intentions

Answer 6

Chalets w annual service charge, some increasing by 10% every 3 years, some every year. Words can't mean what they say, difference amounts to £282 v £2700. Proportionate part of variable expense will never be the same as a fixed sum of money. So two provisions in the clause which are incompatible. Lessees argue that the 10% increase is maximum cap to obligation to pay proportionate part of expenses. Words don't says that but its what they msut mean Lord Carnwrath agrees But majority led by Lord N said no, have to give natural meaning to words, if you dont like them shouldn't have signed, doesnn't matter that it produces odd result. Closer to Mustill's attitude So pricniple 7 likley to arise scarcely, but occasionally, from now on

Answer 7

Business efficacy test | Oh of course test

Answer 8

Hoff makes clear that implication of terms into a contact is part of interpreting contract as a whole

Answer 9

Generally diifficult to imply etermins into elaborately drafted financial contracts, but not impossible bc that happens here One bank guaranteed to another bank the obligaitons of 3P re certain goods Goods didnt exist Guarantor still liable? Steyn J says no, implied condition precedent to guarantor's liability that the goods existed Not expressed bc goes w/out saying Even elaborately drafted commercial documetns can fail to deal w issues so fundamental that no thought is given to them

Answer 10

Tenant wants repayment of rent relating to period after lease is terminated, says that should be implied term. Court says no Two interesting bits of reasoning Argument that rent is paid as consideration for possession, and T didn't have possession, so fair and reasonable to require LL to pay. But this is a 70 page doc w many contractual provisions, if parties intended this why isnt it in the lease? Two (killer argument) it can't be an implied term because there is an understanding in the commercial property market that unless there was a right of express appointment of rules into the lease, T has no right of repayment of rent. Can't imply a term contrary to understanding of parties. Links w principle 4, as most important background fact is the market the parties are operating under

Answer 11

If we've been negotiating for past 3 omonthhs re sale purchase agreement for a company, and have signed lots of docs w lots of clauses, then notice something we agreed to go in the contract isn't in there, we can get this rectified by the court if we can show a common agreement that this clause would be in there but isn't This is very hard to do, because starting point is "then why did you sign it fucko?"

Answer 12

When interpreting a contract you cant use term sheets and prior negotiations and stuff but can in contet of rectification Other party might say we changed our minds, I have to say we didn't, which is very difficult to show

Answer 13

Court decided that the subjective intention of parties were irrelevnnat to reciitification What was required was to establish that the parties' common objecitve intention was not recorded in the contract

Answer 14

Implications if ricniple 9 yet to be worked out in deatil, although CA started prcess in this case (apparently)

Answer 15

Estoppel by convention is about parties having dealt w each other on a particular basis, reaching a common understanding about something, and it being unfair to go back on that understanding

Answer 16

Case concerned interpretation of guarantee given by parent company to bank There was a change of plan, so loan made to assoiated company, Portsoken, rather than to ANPP but guarantee not altered to take account of chaged circumstances Group got into financial difficulties, is the guarantee still effective? Robert Goff J saifd the guarantee was expresssed to cover money owing to bank by ANPP, not Portsoken, and therefore the guarantee could not be interpreted to cover loan made to Portsoken nevertheless found in favour of bank on basis of estoppel by convention Negations and subsequent transaction showed both believed the guarantee did cover the facility as actually made Parties assumed truth of certain state of affairs and transaction took place on basis of that assumption CA agreed w judge on basis of estoppel by convention