What does your clause mean?

What your contract means is essentially decided by strangers. What you personally think is utterly irrelevant because of the importance of an objective view.

What previous cases have said about an individual term or clause is also largely irrelevant because of the importance of context.

Interpreting your contract

When deciding what your contract means, the English courts will consider:

  • what they think it means ie the objective meaning of the language which the parties have to express their agreement [Wood v Capita]
  • the contractual context for that language ie not extracting clauses for review in isolation but considering the contract as a whole and, depending on the nature, formality and quality of drafting of the contract, give more or less weight to elements of the wider context in reaching its view as to that objective meaning [Wood v Capita]
  • the mutual factual context ie facts or circumstances which existed at the time that the contract was made, and which were known or reasonably available to both parties [Arnold v Britton]

What should you do?

You need to ensure that your understanding matches that of your contracting partner and an interested bystander.

The easiest way is to get someone who knows nothing about the two parties relationship history or the project(s) – whether a colleague or an independent contract reviewer, like me – to read any critical contracts or your company’s standard terms and conditions to see if they understand it the way you expect them too.

If it only makes sense because of facts inside your head or various assumptions, then it is in not clear enough.

Cases: Wood v Capita Insurance Services Ltd [2017] UKSC 24; Arnold v Britton [2015] UKSC 36

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