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
  • Whole of the document relevant
  • Commercial sense (business common sense) and avoiding an unreasonable outcome
  • Cutting down rights and remedies
  • Saving the document
  • Consistency of terms
  • Mistakes in the contract
  • Contra proferentem principle
  • Ejusdem generis principle
  • Do express terms negative implied terms when interpreting a contract?
  • more

This Practice Note on rules on interpreting contracts (agreements) (also known as construing or the construction of contracts and contractual terms) considers key cases (Rainy Sky v Kookmin, Arnold v Britton, Wood v Capita) and specific rules (or canons) of construction. It should be read in conjunction with Practice Notes:

  1. Contract interpretation—the guiding principles

  2. How to approach a contractual interpretation dispute—a practical guide

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) and avoiding an unreasonable outcome

  3. cutting down rights and remedies

  4. saving the document

  5. consistency of terms

  6. mistakes in the contract

  7. contra proferentem principle

  8. ejusdem generis principle

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

  10. weighing the evidence

  11. no oral modification (NOM) clauses

For related guidance on contract interpretation, see Practice Notes:

  1. Contract interpretation—the parol evidence rule

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

Whole of the document relevant

While the issues in a case may narrow to the interpretation of one