39:
292:(4) The meaning which a document (or any other utterance) would convey to a reasonable man is not the same thing as the meaning of its words. The meaning of words is a matter of dictionaries and grammars; the meaning of the document is what the parties using those words against the relevant background would reasonably have been understood to mean. The background may not merely enable the reasonable man to choose between the possible meanings of words which are ambiguous but even (as occasionally happens in ordinary life) to conclude that the parties must, for whatever reason, have used the wrong words or syntax. (see
524:
487:
466:
445:
412:
289:(3) The law excludes from the admissible background the previous negotiations of the parties and their declarations of subjective intent. They are admissible only in an action for rectification. The law makes this distinction for reasons of practical policy and, in this respect only, legal interpretation differs from the way we would interpret utterances in ordinary life. The boundaries of this exception are in some respects unclear. But this is not the occasion on which to explore them.
286:(2) The background was famously referred to by Lord Wilberforce as the "matrix of fact," but this phrase is, if anything, an understated description of what the background may include. Subject to the requirement that it should have been reasonably available to the parties and to the exception to be mentioned next, it includes absolutely anything which would have affected the way in which the language of the document would have been understood by a reasonable man.
299:(5) The "rule" that words should be given their "natural and ordinary meaning" reflects the common sense proposition that we do not easily accept that people have made linguistic mistakes, particularly in formal documents. On the other hand, if one would nevertheless conclude from the background that something must have gone wrong with the language, the law does not require judges to attribute to the parties an intention which they plainly could not have had.
261:, Leggatt L.J. said that the judge's interpretation was "not an available meaning of the words." "Any claim (whether sounding in rescission for undue influence or otherwise)" could not mean "Any claim sounding in rescission (whether for undue influence or otherwise)" and that was that. He was unimpressed by the alleged commercial nonsense of the alternative construction.
326:
the words have not been used in a natural and ordinary way. In a case like this, the court is inevitably engaged in choosing between competing unnatural meanings. Secondly, Leggatt L.J. said that the judge's construction was not an "available meaning" of the words. If this means that judges cannot, short of
340:
were agreed that the word "glory" did not mean "a nice knock-down argument." Anyone with a dictionary could see that. Humpty Dumpty's point was that "a nice knock-down argument" was what he meant by using the word "glory." He very fairly acknowledged that Alice, as a reasonable young woman, could not
264:
My Lords, I will say at once that I prefer the approach of the learned judge. But I think I should preface my explanation of my reasons with some general remarks about the principles by which contractual documents are nowadays construed. I do not think that the fundamental change which has overtaken
632:
1 QB 400, 415, Lord
Denning, ‘judges have… time after time, sanctioned a departure from the ordinary meaning. They have done it under the guise of ‘construing’ the clause. They assume that the party cannot have intended anything so unreasonable. So they construe the clause ‘strictly’. They cut down
325:
Finally, on this part of the case, I must make some comments upon the judgment of the Court of Appeal. Leggatt L.J. said that his construction was "the natural and ordinary meaning of the words used." I do not think that the concept of natural and ordinary meaning is very helpful when, on any view,
315:
If one applies these principles, it seems to me that the judge must be right and, as we are dealing with one badly drafted clause which is happily no longer in use, there is little advantage in my repeating his reasons at greater length. The only remark of his which I would respectfully question is
242:
The House of Lords held by a majority that the right to claim rescission was retained by the investors, but the right to claim for damages had indeed been assigned. Construed in its context, the words ‘Any claim (whether sounding in rescission for undue influence or otherwise) that you have or may
279:
1 WLR 989, is always sufficiently appreciated. The result has been, subject to one important exception, to assimilate the way in which such documents are interpreted by judges to the common sense principles by which any serious utterance would be interpreted in ordinary life. Almost all the old
205:
Ltd, where investors could be directly compensated for their losses, and ICS would try recoup the cost by suing the building societies on everyone’s behalf. Accordingly, to get the compensation investors signed a contract to assign their claims to ICS. But in section 3(b) of the claim form the
192:
and for breach of statutory duty. The investors had been encouraged by financiers to enter "Home Income Plans", which meant mortgaging their properties to get cash that they would put into equity linked bonds. They lost money when house prices and stocks fell. Under the
283:(1) Interpretation is the ascertainment of the 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.
243:
have against the West
Bromwich Building Society’ in effect had meant 'Any claim sounding in rescission (whether for undue influence or otherwise)'. It followed that ICS Ltd could sue West Bromwich BS, and other building societies, to vindicate the investors' claims.
214:
or otherwise) that you have or may have against the West
Bromwich Building Society’, so that investors could still sue on some claims individually. While ICS Ltd was suing, West Bromwich BS argued that ‘or otherwise’ meant that claims for
223:
rescission, had not been assigned. ICS Ltd argued that the clause actually meant that claims for damages had been assigned, because ‘or otherwise’ referred to rescission based claims other than undue influence, but not damages.
735:
272, 296, says that ‘The best way forward is for the matter to be one of weight rather than admissibility.’ So declarations of subjective intent, prior negotiations and subsequent conduct should not be ruled out as
341:
have realised this until he told her, but once he had told her, or if, without being expressly told, she could have inferred it from the background, she would have had no difficulty in understanding what he meant.
320:, mangle meanings and syntax but nevertheless communicate tolerably clearly what they are using the words to mean. If anyone is doing violence to natural meanings, it is they rather than their listeners.
316:
when he said that he was "doing violence" to the natural meaning of the words. This is an over-energetic way to describe the process of interpretation. Many people, including politicians, celebrities and
311:"... if detailed semantic and syntactical analysis of words in a commercial contract is going to lead to a conclusion that flouts business commonsense, it must be made to yield to business commonsense."
717:
456:
330:, decide that the parties must have made mistakes of meaning or syntax, I respectfully think he was wrong. The proposition is not, I would suggest, borne out by his citation from
742:, ‘My Kingdom for a Horse: The Meaning of Words’ (2005) 121 LQR 577, argues that prior negotiations and subsequent conduct are already admissible for rectification (
744:
498:
275:
385:
49:
17:
888:
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549:
150:
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590:
645:
633:
the ordinary meaning of the words and reduce them to reasonable proportions. They use all their skill and art to that end.’
577:
563:
258:
609:
349:
748:
2 Lloyd’s Rep 708) and the courts are well accustomed to determining what weight should be place on admissible evidence.
731:
G McMeel, ‘Prior
Negotiations and Subsequent Conduct - the Next Step Forward for Contractual Interpretation’ (2003) 119
873:
620:
378:
198:
38:
712:
628:
332:
280:
intellectual baggage of "legal" interpretation has been discarded. The principles may be summarised as follows:
184:
Investors received negligent advice from their financial advisers, solicitors and building societies, including
809:
435:
185:
883:
202:
230:
held that the right to claim rescission had been retained but the right to claim damages had been assigned.
860:
doctrine ‘is a desperate remedy, to be invoked only if it is necessary to remedy a widespread injustice.’
666:
637:
423:
371:
194:
535:
227:
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where the background includes anything in the 'matrix of fact' that could affect the language's meaning
207:
523:
486:
465:
444:
411:
805:
684:
518:
481:
439:
406:
353:
101:
460:
97:
85:
825:
89:
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732:
477:
146:
8:
327:
612:
Article 5-102 (a) preliminary negotiations are relevant to interpretation and so is (g)
829:
581:
567:
539:
142:
69:
553:
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266:
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what a reasonable person having all the background knowledge would have understood
514:
211:
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231:
867:
739:
707:
337:
317:
250:
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113:
93:
363:
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set out five principles, so that contract should be construed according to:
300:
822:
Schenker & Co (Aust) Pty Ltd v Malpas
Equipment and Services Pty Ltd
613:
244:
172:
where meaning of words is not to be deduced literally, but contextually
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but excluding prior negotiations, for the policy of reducing litigation
117:
345:
175:
on the presumption that people do not easily make linguistic mistakes
149:
case which laid down that a contextual approach must be taken to the
265:
this branch of the law, particularly as a result of the speeches of
138:
Investors
Compensation Scheme Ltd. v West Bromwich Building Society
60:
Investors
Compensation Scheme Ltd v West Bromwich Building Society
687:
Investors
Compensation Scheme Ltd v West Bromwich Building Society
216:
294:
Mannai
Investments Co Ltd v Eagle Star Life Assurance Co Ltd
189:
305:
The
Antaios Compania Neviera SA v Salen Rederierna AB
206:
assignment excluded ‘Any claim (whether sounding in
792:
Ailsa Craig Fishing Co Ltd v Malvern Fishing Co Ltd
854:Bank of Credit and Commerce International SA v Ali
774:Andrews Bros (Bournemouth) Ltd v Singer and Co Ltd
683:
234:overturned the High Court, and ICS Ltd appealed.
865:
798:Darlington Futures Ltd v Delco Australia Pty Ltd
303:made this point more vigorously when he said in
848:Shell Chemicals UK Ltd v P&O Roadtanks Ltd
500:Photo Production Ltd v Securicor Transport Ltd
393:
379:
276:Reardon Smith Line Ltd v Yngvar Hansen-Tangen
762:Proforce Recruit Ltd v The Rugby Group Ltd
669:, and the relevant legislation is now the
386:
372:
37:
856:UKHL 8, Lord Hoffmann (dissenting), the
689:[1998] 1 WLR 896, HL(E), 912-913"
188:('West Bromwich BS'). They had claims in
836:EE Caledonia Ltd v Orbit Valve Co Europe
768:Wallis, Son and Wells v Pratt and Haynes
671:Financial Services and Markets Act 2000
603:Rearden Smith Lines Ltd v Hansen Tangan
550:HIH Casualty Ltd v Chase Manhattan Bank
14:
866:
751:C Staughton Cambridge Law Journal 303
816:Dorset CC v Southern Felt Roofing Ltd
694:Incorporated Council of Law Reporting
591:Interpreting contracts in English law
367:
130:Construction, interpretation, context
646:Chartbrook Ltd v Persimmon Homes Ltd
578:Oceanbulk Shipping SA v TMT Asia Ltd
564:Chartbrook Ltd v Persimmon Homes Ltd
610:Principles of European Contract Law
24:
755:
621:Hollier v Rambler Motors (AMC) Ltd
25:
900:
522:
485:
464:
443:
410:
199:Securities and Investments Board
889:1997 in United Kingdom case law
879:English interpretation case law
713:Alice Through the Looking Glass
629:Gillespie Bros v Roy Bowles Ltd
333:Alice Through the Looking Glass
700:
676:
659:
186:West Bromwich Building Society
13:
1:
838:4 All ER 165, 173, Hobhouse J
812:76, refused to differentiate.
725:
203:Investors Compensation Scheme
424:Hartog v Colin & Shields
7:
667:Financial Conduct Authority
638:Rainy Sky SA v Kookmin Bank
427:[1939] 3 All ER 566
359:
237:
195:Financial Services Act 1986
151:interpretation of contracts
10:
905:
536:ICS Ltd v West Bromwich BS
436:Canada Steamship Lines v R
273:1 WLR 1381, 1384-1386 and
72:, 1 WLR 896, 1 All ER 98
32:ICS Ltd v West Bromwich BS
18:ICS Ltd v West Bromwich BS
874:English contract case law
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574:
560:
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394:Construing contract terms
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76:
65:
55:
45:
36:
31:
653:
482:[1976] 1 WLR 989
179:
850:1 Lloyd’s Rep 297, 301.
826:[1990] VicRp 74
461:[1953] 2 QB 450
582:[2010] UKHL 44
568:[2009] UKHL 38
540:[1997] UKHL 28
343:
313:
253:stated the following.
145:is a frequently-cited
143:[1997] UKHL 28
98:Lord Hope of Craighead
86:Lord Goff of Chieveley
70:[1997] UKHL 28
818:(1989) 48 Build LR 96
802:[1986] HCA 82
554:[2003] UKHL 6
519:[1986] QB 644
505:[1980] UKHL 2
440:[1952] AC 192
309:
255:
90:Lord Lloyd of Berwick
884:House of Lords cases
733:Law Quarterly Review
478:The Diana Prosperity
147:English contract law
665:The SIB is now the
457:Rose Ltd v Pim Ltd
407:(1871) LR 6 QB 597
844:2 Lloyd’s Rep 506
616:and fair dealing.
597:
596:
134:
133:
16:(Redirected from
896:
858:Canada Steamship
788:2 Lloyd’s Rep 42
745:The Karen Oltman
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527:
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469:
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271:Prenn v Simmonds
267:Lord Wilberforce
77:Court membership
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29:
28:
21:
904:
903:
899:
898:
897:
895:
894:
893:
864:
863:
780:Rutter v Palmer
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756:Further reading
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723:
705:
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696:. 19 June 1997.
682:
681:
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515:Thake v Maurice
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428:
416:
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395:
392:
362:
307:1 AC 191, 201:
259:Court of Appeal
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212:undue influence
197:section 54 the
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23:
22:
15:
12:
11:
5:
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403:Smith v Hughes
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82:Judges sitting
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56:Full case name
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50:House of Lords
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804:, (1977) 180
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740:Lord Nicholls
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342:
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338:Humpty Dumpty
335:
334:
329:
328:rectification
323:
321:
319:
318:Mrs. Malaprop
312:
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302:
297:
295:
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284:
281:
278:
277:
272:
268:
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251:Lord Hoffmann
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228:Evans-Lombe J
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157:Lord Hoffmann
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128:
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114:Lord Hoffmann
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108:Case opinions
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94:Lord Hoffmann
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27:
19:
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785:
779:
773:
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743:
711:
702:
686:
678:
661:
644:
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627:
624:1 All ER 399
619:
601:
576:
562:
548:
534:
513:
497:
476:
455:
434:
422:
401:
344:
336:. Alice and
331:
324:
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304:
301:Lord Diplock
298:
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288:
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274:
270:
263:
256:
249:
241:
226:
220:
201:started the
183:
155:
137:
136:
135:
120:(dissenting)
59:
26:
786:The Raphael
764:EWCA Civ 69
736:irrelevant.
356:concurred.
247:dissented.
868:Categories
726:References
614:good faith
354:Lord Clyde
296:2 WLR 945
245:Lord Lloyd
232:Leggatt LJ
221:as well as
208:rescission
118:Lord Lloyd
102:Lord Clyde
842:The Fiona
794:1 WLR 964
708:L Carroll
606:1 WLR 989
350:Lord Hope
346:Lord Goff
66:Citations
832:834, 846
808:266; 61
360:See also
238:Judgment
125:Keywords
782:2 KB 87
776:1 KB 17
716:(1871)
649:UKHL 38
641:UKSC 50
257:In the
217:damages
770:AC 394
824:
800:
718:ch VI
654:Notes
180:Facts
141:
46:Court
810:ALJR
706:See
352:and
210:for
190:tort
828:,
806:CLR
269:in
870::
830:VR
710:,
692:.
348:,
219:,
153:.
116:,
100:,
96:,
92:,
88:,
685:"
673:.
387:e
380:t
373:v
20:)
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