Although it was over 200 pages (with 30 pages of defined terms), given that it had been through 21 iterations and redrafts, you would have thought the lawyers would have ironed out all the wrinkles and resolved any drafting issues… or not!
A contract relating to joint ventures and letters of credit for a highway scheme suffered the ire of Scottish judges when they tried to work out what it meant.
The general principles for contract interpretation on the UK are two-fold. First, the court strives to work out what the parties meant by reading the words in the context of the wider contract (textual). Second, if there are two possible meanings, the court should prefer the one which is consistent with business common sense (contextual).
Clarity or ambiguity?
In their judgments the Scottish Outer and Inner Houses said:
- ‘the two clauses do not mesh together well’ (Outer House)
- the two clauses ‘are not happily drafted whether considered in isolation or together’ (Outer House)
- ‘the clause begins in an unambiguous manner… [but] read as a whole, is ambiguous’ (Outer House)
- ‘it is impossible to determine what was intended by the parties on a purely textual analysis’ (Outer House)
- ‘it has the air of being stitched together from similar contracts’ (Inner House)
- ‘confusion and hence ambiguity’ had been created through poor use of defined terms (Inner House)
- ‘any inconsistency… was a product of poor drafting’ (Inner House).
The Inner House (Scots Court of Appeal) said that the court should not normally search for drafting infelicities in order to justify a departure from the natural meaning of that language.
A lack of clarity frequently drives disputes, allowing competing interpretations of a contract provision. But, it is better to avoid ‘linguistic quirks’ (see Drax v Wipro, 2023).
What should you do?
Check that your intentions and those of your business partner are accurately reflected in your contracts, so that the deal is precisely turned into words.
Cases: Lagan Construction Group v Scot Roads Partnership Project and Another ScotCS CSOH_92 (Outer House); Lagan v Scot Roads  ScotCS CSIH_28