Contract interpretation—admissibility of pre-contractual negotiations and statements
Contract interpretation—admissibility of pre-contractual negotiations and statements

The following Dispute Resolution guidance note provides comprehensive and up to date legal information covering:

  • Contract interpretation—admissibility of pre-contractual negotiations and statements
  • Relationship between pre-contractual communications and written contracts
  • When evidence of pre-contractual negotiations may be admissible in interpreting a contract's meaning
  • Pre-contractual negotiations—knowledge of facts
  • Pre-contractual negotiations—the so-called ‘private dictionary’ principle
  • Pre-contractual negotiations—general object of the contract
  • Pre-contractual negotiations—the process of reaching a written contract
  • Pre-contractual negotiations—negotiations leading to a settlement where A and B settle as a result of breaches by C
  • Rectification claims to correct an error of expression in a written instrument
  • Remedies in respect of pre-contractual statements

When advising on contractual construction you should consider:

  1. the guiding principles used by the court when interpreting the meaning of contracts, including the requirement to have regard to the background matrix of fact (also known as the factual matrix) and the commercial context in which agreements were reached (see Practice Note: Contract interpretation—the guiding principles)

  2. the rules (or 'canons') of construction used to assist in ascertaining the meaning of a written contract (see Practice Note: Rules of contract interpretation)

  3. other aids to contract interpretation such as the parol evidence rule (see Practice Note: The parol evidence rule in interpreting contracts), and

  4. the admissibility of surrounding documents as an aid to interpreting contract (see Practice Note: Contract interpretation—admissibility of surrounding documents)

Relationship between pre-contractual communications and written contracts

Contracts do not spring into existence in a vacuum. Before parties conclude an agreement there is usually some form of communication, whether orally or in writing, during which the prospect of contracting and, crucially, the proposed terms are discussed.

Where this communication leads to a formal, self-contained written contract, it is easy to draw the line between the pre-contractual communications and the contract itself. Where, however, the contract comes about through the process of corresponding, the line between pre-contractual communication and ‘contractual’ communication is blurred.

In either scenario, there are pre-contractual communications which can be