Commercial Law - Mid-Semester Exam
Questions With 100% Verified Answers
Construction—not determining whether binding—extrinsic
materials for so determining
1. Extrinsic materials such as communication between the parties
may have a bearing on whether a contract was actually entered
into.
2. The court needs to understand the commercial context in which
the dispute as to construction arises, for which communications are
admissible. -
correct answer ✅ABC v XIVth Games
Construction—not determining whether binding—extrinsic
materials for so determining
1. Where parties have executed an agreement but it is uncertain
whether they intended to create legal relations, the court may
regard extrinsic materials to determine whether there was that
intention (but not other subjective intentions).
2. Subsequent extrinsic materials are inadmissible. -
correct answer ✅Anaconda Nickel v Tarmoola Australia
Construction—english approach—contextual
,Commercial Law - Mid-Semester Exam
Questions With 100% Verified Answers
1. Under the English approach to construction, the inquiry goes
beyond the language to (a) the context in which the words were
used and (b) the intention the person who used them had.
2. Moving away from literalist/black letter approach to
purposive/contextual approach. -
correct answer ✅Prenn v Simmonds
Construction—english approach—contextual
1. Contracts aren't made in a vacuum. Under the English approach,
the court must place itself in the same factual matrix as that in
which the parties were. -
correct answer ✅Reardon Smith Line v Tngvar Hansen-Tangen
Construction—english approach—contextual
1. The question of construction is how a reasonable recipient would
have understood the notice, where it is considered that the
purpose of the notice was to determine the lease in accordance
with the right.
,Commercial Law - Mid-Semester Exam
Questions With 100% Verified Answers
2. (Lord Hoffman) Contextual information is admissible for a
'process of adjustment' where mistakes have been made in a
contract document. -
correct answer ✅Mannai Investment v Eagle Star Life Assurance
• Tenant had right under lease to determine the lease on the 13th.
The tenant proposed to do so, but wrongly named the date as the
12th.
Construction—english approach—contextual
1. Interpretation goes to the meaning the document would convey
to a reasonable person with background knowledge that would
reasonably have been available to the parties at the time of
contract.
2. Background includes anything that would have affected the way
the language in the document would be understood by reasonable
man.
3. Excluded from background is previous negotiations of parties
and declarations of subjective intent. (Admissible only in an action
for rectification.)
4. The rule of giving words their natural and ordinary meaning
should not preclude actual intentions of the parties. Plain meaning
, Commercial Law - Mid-Semester Exam
Questions With 100% Verified Answers
should not give parties an intention they didn't have. -
correct answer ✅Investors Compensation Scheme v West
Bromwich Building
Construction—not about parol evidence rule or implied terms;
australian approach—literalist
1. Per Mason J, the true rule is that evidence of surrounding
circumstances is admissible in construction—if the language is
ambiguous. It is not admissible to contradict the language of the
contract when it has a plain meaning.
2. Per Mason J, background knowledge is inadmissible unless
known to both parties at the time. If the facts are notorious,
knowledge will be presumed. -
correct answer ✅Codelfa Construction v SRA NSW
Construction—australian approach—literalist
1. Old rules of interpretation, whereby extrinsic evidence to assist
contract construction, may have been draconian. However, the
reverse approach causes tremendous expense in commercial
litigation. -
correct answer ✅LMI Australiasia v Baulderstone Hornbrook
Questions With 100% Verified Answers
Construction—not determining whether binding—extrinsic
materials for so determining
1. Extrinsic materials such as communication between the parties
may have a bearing on whether a contract was actually entered
into.
2. The court needs to understand the commercial context in which
the dispute as to construction arises, for which communications are
admissible. -
correct answer ✅ABC v XIVth Games
Construction—not determining whether binding—extrinsic
materials for so determining
1. Where parties have executed an agreement but it is uncertain
whether they intended to create legal relations, the court may
regard extrinsic materials to determine whether there was that
intention (but not other subjective intentions).
2. Subsequent extrinsic materials are inadmissible. -
correct answer ✅Anaconda Nickel v Tarmoola Australia
Construction—english approach—contextual
,Commercial Law - Mid-Semester Exam
Questions With 100% Verified Answers
1. Under the English approach to construction, the inquiry goes
beyond the language to (a) the context in which the words were
used and (b) the intention the person who used them had.
2. Moving away from literalist/black letter approach to
purposive/contextual approach. -
correct answer ✅Prenn v Simmonds
Construction—english approach—contextual
1. Contracts aren't made in a vacuum. Under the English approach,
the court must place itself in the same factual matrix as that in
which the parties were. -
correct answer ✅Reardon Smith Line v Tngvar Hansen-Tangen
Construction—english approach—contextual
1. The question of construction is how a reasonable recipient would
have understood the notice, where it is considered that the
purpose of the notice was to determine the lease in accordance
with the right.
,Commercial Law - Mid-Semester Exam
Questions With 100% Verified Answers
2. (Lord Hoffman) Contextual information is admissible for a
'process of adjustment' where mistakes have been made in a
contract document. -
correct answer ✅Mannai Investment v Eagle Star Life Assurance
• Tenant had right under lease to determine the lease on the 13th.
The tenant proposed to do so, but wrongly named the date as the
12th.
Construction—english approach—contextual
1. Interpretation goes to the meaning the document would convey
to a reasonable person with background knowledge that would
reasonably have been available to the parties at the time of
contract.
2. Background includes anything that would have affected the way
the language in the document would be understood by reasonable
man.
3. Excluded from background is previous negotiations of parties
and declarations of subjective intent. (Admissible only in an action
for rectification.)
4. The rule of giving words their natural and ordinary meaning
should not preclude actual intentions of the parties. Plain meaning
, Commercial Law - Mid-Semester Exam
Questions With 100% Verified Answers
should not give parties an intention they didn't have. -
correct answer ✅Investors Compensation Scheme v West
Bromwich Building
Construction—not about parol evidence rule or implied terms;
australian approach—literalist
1. Per Mason J, the true rule is that evidence of surrounding
circumstances is admissible in construction—if the language is
ambiguous. It is not admissible to contradict the language of the
contract when it has a plain meaning.
2. Per Mason J, background knowledge is inadmissible unless
known to both parties at the time. If the facts are notorious,
knowledge will be presumed. -
correct answer ✅Codelfa Construction v SRA NSW
Construction—australian approach—literalist
1. Old rules of interpretation, whereby extrinsic evidence to assist
contract construction, may have been draconian. However, the
reverse approach causes tremendous expense in commercial
litigation. -
correct answer ✅LMI Australiasia v Baulderstone Hornbrook
