Running head: CONTRACT LAW – TERMS OF THE CONTRACT 1
CONTRACT LAW
TERMS OF THE CONTRACT
Name
Institution
Course
Tutor
Date
,CONTRACT LAW – TERMS OF THE CONTRACT 2
CONTRACT LAW
TERMS OF THE CONTRACT
INTERPRETATION – involves “ascertaining the meaning of the
contractual language” and “ascertaining the legal effect of the words”
(Gerard McMeel).
Literal interpretation
In the 19th century, the courts took a literal approach to contractual
interpretation:
“The question in this and other cases of construction of written
instruments, is, not what was the intention of the parties; but what is the
meaning of the words they have used.”
Lord Denman, Rickman v Carstairs (1833) 110 ER 931, 935
“It is the duty of the court … to construe the document according to the
ordinary grammatical meaning of the words used therein, and without
reference to anything which has previously passed between the parties to
it.”
, CONTRACT LAW – TERMS OF THE CONTRACT 3
Sir Herbert Cozens-Hardy MR, Lovell and Christmas Ltd v Wall (1911)
104 LT 85, 88
Advantages:
Clear
Predictable
Efficient
Disadvantages:
Unrealistic
Thwarts parties’ intentions
The Investors Compensation Scheme principles
The modern approach to interpretation was laid down in the ICS case:
Leading case in contractual interpretation today.
Investors Compensation Scheme v West Bromwich Building Society
[1998] 1 WLR 896
Facts | A group of elderly investors had re-mortgaged their homes with
WB. Their investments failed. They assigned their claims against WB to
ICS, who were to bring proceedings on their behalf. The claim form
stated that the investors had assigned all their claims to ICS, except for
“any claim (whether sounding in rescission for undue influence or
otherwise).” WB argued that this meant ICS had not been validly
assigned any claims by the investors.
Held | The parties had made a mistake in the drafting of their contract.
“Any claim (whether sounding in rescission for undue influence or
otherwise)” would be interpreted to mean “any claim sounding in
CONTRACT LAW
TERMS OF THE CONTRACT
Name
Institution
Course
Tutor
Date
,CONTRACT LAW – TERMS OF THE CONTRACT 2
CONTRACT LAW
TERMS OF THE CONTRACT
INTERPRETATION – involves “ascertaining the meaning of the
contractual language” and “ascertaining the legal effect of the words”
(Gerard McMeel).
Literal interpretation
In the 19th century, the courts took a literal approach to contractual
interpretation:
“The question in this and other cases of construction of written
instruments, is, not what was the intention of the parties; but what is the
meaning of the words they have used.”
Lord Denman, Rickman v Carstairs (1833) 110 ER 931, 935
“It is the duty of the court … to construe the document according to the
ordinary grammatical meaning of the words used therein, and without
reference to anything which has previously passed between the parties to
it.”
, CONTRACT LAW – TERMS OF THE CONTRACT 3
Sir Herbert Cozens-Hardy MR, Lovell and Christmas Ltd v Wall (1911)
104 LT 85, 88
Advantages:
Clear
Predictable
Efficient
Disadvantages:
Unrealistic
Thwarts parties’ intentions
The Investors Compensation Scheme principles
The modern approach to interpretation was laid down in the ICS case:
Leading case in contractual interpretation today.
Investors Compensation Scheme v West Bromwich Building Society
[1998] 1 WLR 896
Facts | A group of elderly investors had re-mortgaged their homes with
WB. Their investments failed. They assigned their claims against WB to
ICS, who were to bring proceedings on their behalf. The claim form
stated that the investors had assigned all their claims to ICS, except for
“any claim (whether sounding in rescission for undue influence or
otherwise).” WB argued that this meant ICS had not been validly
assigned any claims by the investors.
Held | The parties had made a mistake in the drafting of their contract.
“Any claim (whether sounding in rescission for undue influence or
otherwise)” would be interpreted to mean “any claim sounding in
