Q&As

Can a contract that has expired be extended where the expired contract contained a provision for extension?

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Published on LexisPSL on 04/12/2017

The following Commercial Q&A provides comprehensive and up to date legal information covering:

  • Can a contract that has expired be extended where the expired contract contained a provision for extension?
  • Interpretation of contracts
  • Conduct of the parties

Interpretation of contracts

Whether the parties can extend a contract containing an extension clause where the contract has expired will depend on the interpretation of the contract, the intentions of the parties and the circumstances of each case. The basic approach of contract interpretation as provided by Lord Hoffmann’s five principles in ICS v West Bromwich Building Society (see Practice Note: Contract interpretation—the guiding principles).

Lord Steyn expressed the ICS principles of contractual interpretation in Sirius International Insurance Co (Publ) v FAI General Insurance Ltd:

‘The aim of the inquiry is not to probe the real intentions of the parties but to ascertain the contextual meaning of the relevant contractual language. The inquiry is objective: the question is what a reasonable person, circumstanced as the actual parties were, would have understood the parties to have meant by the use of specific language. The answer to that question is to be gathered from the text under consideration and its relevant contextual scene.’

Depending on the clause in question, it may be possible that the parties only intended for the contract to be e

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