Contract interpretation—rules of contract interpretation
Contract interpretation—rules of contract interpretation

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

  • Contract interpretation—rules of contract interpretation
  • Interpreting contracts—whole of the document relevant
  • Interpreting contracts—commercial sense (business common sense)
  • Interpreting contracts—avoiding an unreasonable result
  • Interpreting contracts—cutting down rights and remedies
  • Interpreting construction contracts—consistency of terms
  • Interpreting contracts—standard printed terms and special terms
  • Interpreting contracts—general and specific provisions
  • Interpreting contracts—‘subject to’ clauses
  • Interpreting contracts—saving the document
  • more

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) is supplemented by general rules or guidelines (also known as 'canons of construction') which can be used to assist in ascertaining the meaning of a written contract. This Practice Note considers the most important of these guidelines, namely:

  1. the whole of the document relevant

  2. commercial sense (business common sense)

  3. avoiding an unreasonable result

  4. cutting down rights and remedies

  5. consistency of terms (interpreting construction contracts)

  6. standard printed terms and special terms

  7. general and specific provisions

  8. saving the document

  9. mistakes in the contract

  10. contra proferentem principle

  11. ejusdem generis principle

  12. do express terms negative implied terms when interpreting a contract?

  13. weighing the evidence

  14. no oral modification (NOM) clauses

  15. interpreting oral contracts

For related guidance on contract interpretation, see Practice Notes:

  1. Contract interpretation—the parol evidence rule in interpreting contracts

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

Interpreting contracts—whole of the document relevant

The document should be considered as to its whole effect and not just the impact of individual terms. Therefore, while the issues in a case may narrow to the interpretation of one specific clause, its interpretation must be considered within the context of the document as a whole (Charter Reinsurance v Fagan, Re Sigma Finance).

A necessary