Contract interpretation: commercial intent takes centre stage
Richard Smellie considers the impact of the Rainy Sky decision on the drafting and interpreting of contracts
Fenwick Elliott Annual Review 2012/2013
Annual Review 2012/13
Download this issueOur 16th Fenwick Elliott Annual Review provides a practical overview of the latest legal developments that may be of interest to those we work with. If there has been a theme to those key legal developments over the past few months, it is probably the importance of clear contract documentation which focuses on the specific circumstances and details of your particular project. In July 2012 Mr Justice Akenhead said that:
“In my judgment, it is necessary to construe the words in a sensible and commercial way that would resonate with commercial parties in the real world.”
The Judge was talking about the obligations of those making and considering claims for loss and/or expense but his words could equally apply to a number of the other topics we feature. What is the difference between an obligation to use “best” and one to use “reasonable endeavours”, or even “all reasonable endeavours”? What are the precise duties of the project manager or employer’s agent? What does the tricky clause in that guarantee really mean?
As our lead article comments, business common sense has now been placed at the heart of contract interpretation when ambiguity arises – something which has important ramifications for all commercial contracts. When drafting contracts, parties – and their advisors – must now give greater thought to the inclusion of provisions that expressly confirm the commercial purpose of the agreement.
There are plenty more articles for your consideration, the links to which are below or you can download a PDF of the full Review by completing the “Download our Annual Review” form. If you would like a hard copy of this Annual Review, please contact Jeremy Glover with your name, company name, address and email.
