Commercial Common Sense Again: What Role in Contract Interpretation?
DOI | 10.3366/elr.2021.0674 |
Published date | 01 January 2021 |
Date | 01 January 2021 |
Pages | 89-94 |
Author |
In
Lord Drummond Young delivered the opinion of the Inner House. He began by noting that the general principles of construction were well established and that the important principles were found in a number of cases
The ultimate aim of interpreting a provision in a contract, especially in a commercial contract, is to determine what the parties meant by the language used, which involves ascertaining what a reasonable person would have understood the parties to have meant… The relevant reasonable person is one who has all the background knowledge which would reasonably have been available to the parties in the situation in which they were at the time of the contract.
Two further principles were important: (1) in interpreting a provision the court should take a purposive approach, having regard to the fundamental objectives that reasonable people in the parties' positions would have had in mind. The central provisions of a contract should, where there was any doubt, prevail over subsidiary clauses. The substance of the parties' agreement had to be construed objectively and should prevail over “niceties of wording, and in particular over clauses that have not been well drafted”;
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