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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 extended using the extension clause during the duration of the original contract. Indeed, the very fact that extension of the contract was provided for and was not used may point to
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