INTRODUCTION

Summary of main points

1. (1) ‘Interpretation [of written contracts] is the ascertainment of meaning which the document would convey to a reasonable person having all the background knowledge which would reasonably have been available to the parties in the situation in which they were at the time of the contract.’ See the quotation from Lord Hoffmann in the Investors Compensation Scheme case (1998) at 14.07.

2. (2) Interpretation of written contracts is a matter of law, whereas interpretation of contracts not wholly contained in writing is a matter of fact (14.03). Appeal courts have the power to review first instance errors of ‘law’, but in general defer to findings of fact.

3. (3) The House of Lords in Chartbrook Ltd v. Persimmon Homes Ltd (2009) held that a court can ‘construe’ by wholly recasting a relevant phrase or portion of a written contract when it is obvious that the drafting has gone awry and the parties' true pre-formation shared meaning can be ascertained by consideration of the commercial purpose of the agreement and internal hints in the text (14.21 ff). Such ‘curative interpretation’ has a similar function to the more formal equitable doctrine of ‘rectification’ (see (9) below), because both doctrines have the effect of revising a document. The safer course is to plead both ‘construction’ and ‘rectification’.

4. […]