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Choose your contract wording carefully

19 July 2024 / Nicholas Dobson
Issue: 8080 / Categories: Features , Contract , Procedure & practice , Banking
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Nicholas Dobson relays the costly tale of a single word in a banking contract
  • Courts are required to consider the ordinary meaning of words used in the context of the contract as a whole and the relevant factual and commercial background, excluding prior negotiations.
  • The aim is objectively to identify the intention of the parties, ie, what a reasonable person having all the background knowledge which would have been available to the parties, would have understood them to mean by using the language in the contract.
  • Interpretation is an iterative process in which rival interpretations should be tested against the provisions of the contract and its commercial consequences.

Lewis Carroll’s Humpty Dumpty had no doubt about the meaning of words: ‘When I use a word… it means just what I choose it to mean—neither more nor less.’ For, as he saw it, it was simply a question of personal autonomy: ‘The question is… which is to be master—that’s all.’ However, unlike Humpty (who had the luxury of being a mere imaginative

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NEWS
The landmark Supreme Court’s decision in Johnson v FirstRand Bank Ltd—along with Rukhadze v Recovery Partners—redefine fiduciary duties in commercial fraud. Writing in NLJ this week, Mary Young of Kingsley Napley analyses the implications of the rulings
Barristers Ben Keith of 5 St Andrew’s Hill and Rhys Davies of Temple Garden Chambers use the arrest of Simon Leviev—the so-called Tinder Swindler—to explore the realities of Interpol red notices, in this week's NLJ
Mazur v Charles Russell Speechlys [2025] has upended assumptions about who may conduct litigation, warn Kevin Latham and Fraser Barnstaple of Kings Chambers in this week's NLJ. But is it as catastrophic as first feared?
Lord Sales has been appointed to become the Deputy President of the Supreme Court after Lord Hodge retires at the end of the year
Limited liability partnerships (LLPs) are reportedly in the firing line in Chancellor Rachel Reeves upcoming Autumn budget
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