- Construction of contract — Interpretation of contract
Commercially, this is the most important field of contractual law. In recent decades, English courts have declared that the task is to interpret written contracts (also known as ‘construction’) with sensitivity to shared purposes and aims. The courts have regard to the factual matrix within which the contract has arisen and to issues of business or commercial common sense. The courts will also read contractual wording without misplaced pedantry. Under the rubric of ‘constructive construction’, judges are prepared to rearrange text when it is clear that inapposite language has been used and it is also objectively obvious what the shared intention must have been. This process is illuminated by text, context, and (where there is genuine ambiguity) to commercial common sense, but not by deep reference to background party discussion or private opinion. Thus there are three evidential bars: the courts will not admit evidence of a party’s subjective intent or understanding; secondly, evidence of negotiations is inadmissible (but such evidence will be fundamental if a plea of rectification is made, on which chapter 21); thirdly, post-formation conduct is inadmissible (unless there has been a variation or estoppel by convention; on the latter [2.58]).
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