- Alert: Supreme Court rules on contract interpretation—Textualism versus contextualism (Wood v Capita Insurance Services Limited)
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Commercial analysis: The Supreme Court has ruled on the correct approach to contractual interpretation. This case concerned the true construction of an indemnity clause in a sale and purchase agreement (SPA), a detailed and professionally drafted contract, under which Capita purchased an insurance brokerage company from Mr Wood and two other sellers. The Commercial Court endorsed Capita's construction that the indemnity covered certain claims by Capita but the Court of Appeal had overturned that decision. Capita appealed against the Court of Appeal’s order, arguing that it had fallen into error because it had been influenced by the respondent’s submission that the decision of the Supreme Court in Arnold v Britton  UKSC 36 had ‘rowed back’ from the guidance on contractual interpretation which the Supreme Court gave in Rainy Sky SA v Kookmin Bank  UKSC 50. Capita argued that this had caused the Court of Appeal to place too much emphasis on the words of the SPA and to give insufficient weight to the factual matrix. The Supreme Court unanimously dismissed Capita’s appeal.
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