No-one cares what you think your contract meant…

As an English court said:

What each of the parties intended or understood by their written and spoken communications is irrelevant unless that intention or understanding was shared with and agreed or accepted by the other party.

English legal rules on contract interpretation disregard any subjective evidence of your and the other contracting party’s intentions.  They assess meaning objectively in the light of:

  • the natural and ordinary meaning of the words
  • other relevant contract terms
  • the purpose of the clause and your contract
  • facts/circumstances known or assumed by the parties at the time the contract was made
  • commercial common sense.

The court has to disregard what each of the parties thought or believed the contract to mean (the subjective evidence of their intentions).

Seeking clarity

When it comes to considering the words used, the worse/less clear their drafting, the easier it is for the courts to depart from their ordinary meaning. However (as noted in Network Rail) this does not mean the court should actively seek drafting inconsistencies (errors or infelicities) to allow them to change the meaning of the contract words.

What about jargon?

When it comes to determining the meaning of legal or construction jargon the court take the view that while a home-owner should not be treated as having the same detailed knowledge of that jargon as those experienced in construction, the terms are treated as having been read by a reasonably well-informed person.

What should you do?

Write your contract clearly. Minimise jargon. Use simple plain language. Check any terms where you are not 100% sure that both of you mean the same thing.

Don’t shy away from asking questions before you sign… it’s much less foolish (not to mention cheaper/quicker) than waiting for the judge to tell you what it means!

Cases: Optimus Build Ltd v Southall & Anor [2020] EWHC 3389; Abc Electrification Ltd v Network Rail Infrastructure Ltd [2020] EWCA Civ 1645

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