Interpretation of Contract Terms

Question 0

Prenn v Simmonds (1971)

Answer 0

Should enquire beyond the language in interpretation with reference to the circumstances, words and the objective of the creator of the contract.

Question 1

Lovell and Christmas Ltd v Wall (1911)

Answer 1

Traditional approach to interpretation, focus should be on language, the ordinary grammatical meanings of the words used.

Question 2

ICS v West Bromich BS (1998)

Answer 2

Common sense principles should be applied; the relationship between the text and party intention, the matrix of fact and avoiding absurd/uncommercial results.

Question 3

The Aragon (1977)

Answer 3

A charterparty contained geographical limits, stated east of the Panama Canal, this was absurd because there were no ports east of this canal, held: it meant east coast ports accessed without going through the canal.

Question 4

Wideman Machine Tool Sales v L Schuler AG (1974)

Answer 4

The more unreasonable a result, the less likely that the parties intended it, or if they do intend it the clearer they should make it.

Question 5

Pink Floyd Music Ltd v EMI Records Ltd (2010)

Answer 5

Words must be interpreted by what a reasonable person (informed with business common sense, the knowledge of the parties, including the other provisions of the contract, and the experience and expertise of the parties at the time of the contract) would have understood by the provision.

Question 6

Rainy Sky SA v Kookmin Bank (2011)

Answer 6

Relationship between the commercial sense of the term and its interpretation must be considered, can’t just reject an interpretation because it’s absurd.

Question 7

Static Control Components v Egan (2004)

Answer 7

Principles from ICS lead to fairer outcomes.