Roald Dahl’s BFG warned, “Don’t gobblefunk around with words”. It’s good advice for contract drafting. Why? Because gobblefunking around with your words could cause confusion when contracts are supposed to create certainty.
Choosing words carefully is crucial when it comes to contracts to ensure intentions are clear, as Lucinda Robinson explains. If a problem ever arises on a project, a lawyer will go straight to the contract to see what it records as the parties’ agreement on the subject. Contracts for complex construction projects inevitably include multiple documents setting out legal, technical and commercial requirements and running to hundreds of pages, so they are not an easy read, and there is huge scope for inconsistencies. How can these be unravelled or reconciled? Well, over time, some rules of interpretation have been developed through the judgments of the courts and these are explained below, along with some practical tips to avoid inconsistencies arising in the first place.
Describing the dilemma
First, here are two stories that demonstrate how the problem can arise and how it is approached.
Workman Properties Ltd v Adi Building and Refurbishment Ltd [2024] EWHC 2627 (TCC)
Set on a dairy farm in Gloucestershire, this is a tale of refurbishment and expansion works carried out under an amended JCT Design and Build Contract.
Workman, the employer, said its contractor, Adi, was responsible for all design work including that done by a consultant before Adi came on board. Adi disagreed, pointing to clause 1.4 of the Employer’s Requirements, which Adi said was a contractual warranty meaning it did not have to check the pre-contract design: “significant design has been developed to date which has been taken to end of RIBA Stage 4”. The adjudicator agreed, finding that Workman was in breach for not ensuring the design was at Stage 4, so Adi was entitled to a change and related costs. Adi then adjudicated for those costs, won and got paid.
Unhappy with that ending, Workman asked the court to rewrite it using CPR Part 8. Workman argued that the contract was Design and Build, so Adi was responsible for all the design, and Workman listed multiple clauses in support. This time, Workman won. Reading the contract as a whole, the judge could see that clause after clause made Adi responsible for all design. The one clause that did not was an outlier in the Employer’s Requirements and it was not enough, on its own, to override the clear intention.
What does this tell us? The court will look at the words of the contract and the overall picture they paint. If you want to override the nature of the contract, you need to do more than add one contradictory statement or qualification at the back or rely on subjective understandings.
John Sisk and Son Ltd v Capital & Centric (Rose) Ltd [2025] EWHC 594 (TCC)
Once upon a time, Sisk designed and built two residential buildings and refurbished two mills. The amended JCT Design and Build Contract placed extensive site risk conditions on Sisk, which came to life.
In chapter 1 – an adjudication – Sisk was found liable for ground conditions and existing structures on the site, depriving it of an extension of time and loss & expense for delay.
In chapter 2, Sisk challenged the existing structures finding at court. The judge had to grapple with some uncertainty around the documents. Clause 2.42 said Sisk was responsible for site conditions subject to item 2 of the “Clarifications”. But there were two clarifications documents, so which one was it? The “Contract Clarifications” document said the employer (C&C) took the existing structures risk. The Tender Submission Clarifications document said otherwise, but this was an earlier document and was only in the electronic version of the contract and not the hard copy.
The ending favoured Sisk. The judge found that the Contract Clarifications document was the relevant one, meaning the risk of existing structures belonged to the employer. The Tender Submission Clarifications were not referred to in the Contract Document schedule and there was no other reference to them, or signature upon them, to suggest they had been incorporated.
What is the moral of this story? Check all the documents you plan to include in your contract and ensure they record the agreed intentions and are consistent with each other. Avoid including all previous correspondence and documents created before negotiations finish because they may not reflect the final position and risk causing confusion.
Working out what the words mean
There is a lot of academic law around contract interpretation, but the five key principles were summarised succinctly in Bank of Credit and Commerce International SA (in Compulsory Liquidation) v (1) Munawar Ali, (2) Sultana Runi Khan and Others [2001] UKHL 8:
“To ascertain the intention of the parties, the court reads the contract as a whole, giving the words used their natural and ordinary meaning in the context of the agreement, the parties’ relationship and all the relevant facts surrounding the transaction so far as known to the parties. To ascertain the parties’ intentions, the court does not of course inquire into the parties’ subjective states of mind but makes objective judgment based on the materials identified.”
These principles are explored further below.
- Construe contracts objectively
The parties’ subjective views do not matter. The court will try to identify “what a reasonable person, having all the background knowledge which would have been available to the parties, would have understood them to be using the language in the contract to mean”, as captured in Chartbrook Ltd v Persimmon Homes Ltd [2009] AC 1101.
- Start with the words used
Words in a contract will be given their “natural and ordinary meaning”, and they will be the starting point for interpretation (Arnold v Britton and others [2015] UKSC 36). The senior courts have repeatedly emphasised that the language should be prioritised over other issues, such as commercial or common sense. For example: “The primary source for understanding what the parties meant is their language interpreted in accordance with conventional usage” (Bank of Credit and Commerce v (1) Ali, (2) Khan and Others [2001] UKHL 8).
Whilst the text is a starting point and important, the court will not be beholden to a dictionary meaning if it would make no sense in the context of the overall agreement, so the following principles also apply.
- Consider the purpose of the clause and contract
When applying the objective test, it is assumed that the reasonable person reading the text has all the background information known by both parties at the point the contract was made (Investors Compensation v West Bromwich Building Society [1997] UKHL 28). Consequently, the court can look at the overall purpose of the contract and surrounding facts. A good way to ensure this information is considered is to include it into the recitals or clauses of the contract.
- Read the contract as a whole
Clauses need to be read in the context of the contract as a whole, (Providence Building Services Ltd v Hexagon Housing Association Ltd [2024] EWCA 962). A court will look at all relevant clauses and parts of the contract to ascertain the overall intention, rather than focus in on just one item, as Workman v Adi above demonstrates.
An exercise lawyers can do when faced within an inconsistency is to identify all relevant clauses and consider which support which arguments. This can reveal a pattern indicating the real intention.
- Apply commercial common sense
Usually, commercial common sense will not override the language used, even if that results in a bad bargain for one party. The classic example was in Arnold v Britton [2015] UKSC 36, where a formula for calculating ground rent for caravans on a holiday park would result in rents of >£1 million after a few years. The formula was upheld based on the words used, even though it was a tough result.
However, there are some limits to this. For example, if the drafting is ambiguous, there are conflicting meanings, and one result would be unreasonable or absurd, the court may adopt the most common-sensical interpretation on the assumption it was mostly likely to reflect the intention (Rainy Sky SA and others v Kookmin Bank [2011] UKSC 50 and Wood v Capita Insurance Services Ltd [2017] UKHL 24).
Extra Tip: Apply the “Canons of Construction”
If the court is still struggling to decipher the parties’ meaning after applying the rules above, it can resort to some “canons of construction” to help with interpretation. These three are worth remembering:
- Contra proferentum: Uncertainty is usually resolved against the party putting forward a clause, but this may not be appropriate if both parties have been advised and are on an equal footing.
- Clear words are needed to remove rights. Courts are reluctant to accept interpretations that remove key legal entitlements – for example, by limiting liability, or removing common law rights and defences. The words will need to be crystal clear before such meanings will be found.
- Bespoke over standard: Individually negotiated or bespoke wording will usually take precedence over standard terms, on the assumption that if time was spent wordsmithing, the more likely it is that the words will reflect the deal reached.
Managing the Risk
It is easy to say that questions of interpretation could be avoided by being clear in the contract from the outset. However, ensuring consistency across and within all documents forming a construction contract is a tall order when there are numerous sets of complicated documents, written by different teams under time pressure. Strategies that may help with this are suggested here.
- Read through the entire contract to see if any terms conflict or are unclear before it is signed. Even if there is not enough time for a thorough review, any time spent checking the terms could identify and resolve some issues.
- Involve the right people in drafting the contract to ensure the intention is clear to design, programming, and commercial teams, as well as the lawyers.
- Avoid including documents that are out of date, or email trails, as they are rarely complete and often outdated.
- If you are using formulas or calculations, include worked examples to show how they are supposed to function. The example may be a more accurate illustration of intention than the words used to explain the mechanism.
- Consider how conflicts between documents should be managed if they arise and make provision for this in the terms of the contract. For example, will the contractor need additional time and money if there is a conflict between drawings within the Employer’s Requirements that it needs to resolve?
- Similarly, if the contractor has included a list of clarifications and derogations, then the terms of the contract will need to be amended to ensure they are incorporated and that the information in the list takes precedence over any conflicting information in the Employer’s Requirements. Any assumption that the Contractor’s Proposals will trump the Employer’s Requirements because it is the later document is (usually) a myth.
- A priority clause can be used to manage conflicts between contract documents by establishing their order of precedence. Typically, the order will be amendments, standard terms, Employer’s Requirements, Contractor’s Proposals, other contract documents. Whilst this approach can help when time is tight, there are some limitations to the effectiveness of these clauses.
For example, priority clauses are only needed if there is an irreconcilable discrepancy between contract documents. Even then, they may be ignored if apparently inconsistent terms can be reconciled. Blackpool Borough Council v VolkerFitzpatrick Ltd & Ors [2020] EWHC 1523 (TCC) concerned an NEC contract for the design and construction of a tram depot. A question arose over whether the design life of the roof components was 25 years or 50 years. The Works Information stated the design life was 20 years unless otherwise specified in Appendix 1. In Appendix 1, the design life was said to be 50 years for the structural frame and 25 years for the external shell. The standard form does not include a priority clause, but one had been added as a Z clause by amendment. However, the court did not use the priority clause, finding that the provisions could be read together as a whole, so there was no inconsistency.
Further, priority clauses do not address ambiguities in the wording of a clause, or between documents at the same level. Overall, it is worth including a priority clause, but alongside, and not in substitution for working to ensure clarity and consistency across the contract.
Final word
The idea for this article grew out of a conversation with my colleague David Bebb about what keeps disputes lawyers busy. The answer: unscrambling words and phrases in contracts to figure out what was intended. It is at the heart of what we do, and it costs businesses far too much money. So, David and I considered the ways to minimise this risk set out above. In short, to reduce the amount of time you spend talking to lawyers, say what you mean and mean what you say. If you choose your words carefully, you can write a story with a happy ending.