Interpretation of Contracts

This book is a second edition of Interpretation of Contracts (2007). The original work examined various issues surrounding the question of how contracts should be interpreted by courts, in particular focusing on the law of contract interpretation following Lord Hoffmann’s exposition of the principles of contextual interpretation in Investors Compensation Scheme Ltd v West Bromwich Building Society [1998] 1 WLR 896. As with the original, this new edition provides an overview of the subject, concentrating on elements of controversy and disagreement, rather than a detailed analysis of all the contract law rules and doctrines that might be regarded as interpretative in one sense or another. The book will be concerned with interpretation of contracts generally (following the rule that there are not different rules of interpretation for different kinds of contracts), but with reference to commercial contracts in particular, since this is the area in which the contextual interpretative approach was developed, and where it has most relevance. The overall aim of the second edition remains the same as the first – to produce an accessible and readable guide to contract interpretation for law students, scholars and practitioners.

Table of Contents Table of cases Preface to first edition Preface to second edition Chapter 1 The Nature of Contract Interpretation Introduction What is interpretation? A general theory of interpretation? Interpretation and meaning Context and interpretation What is a contract? Interpretation and contractual power The range of interpretation problems Why do contractual interpretation disputes exist? Foundations of contract interpretation Conclusion Chapter 2 The Rise (and Fall?) of Contextual Interpretation Literalism and rules in contracts interpretation The contextualist shift Lord Hoffmann’s restatement Implications of Lord Hoffmann’s contextualism The meaning communicated to a reasonable person No need for ambiguity before examining the background Mistakes can be corrected by contextual interpretation The role of business common sense Contextualism subsumes literalism Contextual interpretation subsumes doctrine Contextual interpretation in context Accessing the ‘real’ agreement Interdisciplinarity in law Conclusion Chapter 3 Divisions and Disputes in Contract Interpretation Retreating from contextualism Arnold v Britton The role of ambiguity What the words say/what the language communicates Identifying the relevant context Commercial reasonableness after Arnold v Britton Reasonable person or pedantic lawyer? The limitations on the contract background Common intentions of the parties Admissibility of prior negotiations Subjectivity Costs Helpfulness, relevance and the legal framework Should the rule be reformed? Subsequent conduct The retreat from contextualism in context Contract complexity Maintaining competitive edge Waning European influence Conclusion Chapter 4 The Scope of Contract Interpretation Interpretation or something else? Interpretation and implied terms A-G of Belize v Belize Telecom Connections and disconnections between interpretation and implication What turns on the division between implication and interpretation? Interpretation and construction Interpretation and rectification Conclusion Chapter 5 Formalism and Contract Interpretation Indications of formalism in English contract law Form and interpretation The rise of neo-formalism Neo-formalism: empirical, theoretical or pragmatic? Empirically defended formalism Theoretically defended formalism Pragmatically defended formalism The preference for formalism and textualism The costs of contextualism Judicial error Flexible norms vs legal norms The existence of contextual materials Conclusion Chapter 6 Controlling Contract Interpretation General considerations Courts, not the parties, interpret contracts The limits of formalism Choosing between formalist or contextualist contracting strategies Formalist interpretation of contractual standards Contracting for textualism Entire agreement clauses (EACs) Should an EAC influence interpretation? Resurrecting the parol evidence rule Identifying and interpreting obligations Evading the EAC The impossibility of dispensing with context Conclusion Bibliography Index

Catherine Mitchell is a Reader in Private Law at Birmingham Law School, University of Birmingham. She has published widely on contract law issues in the UK and internationally.