Business Sense trumps Natural Meaning in contract dispute

royalcourts

In a case which illustrates that reliance on the natural meaning of words will not always be possible, the High Court has applied business common sense to interpret a contract. While the judge recognised that words should be given their natural meaning, however surprising or unreasonable the result, in this case the words were genuinely ambiguous. Of the possible interpretations, one was clearly absurd and another too unlikely given the commercial background. Accordingly, the contract was interpreted to reflect business common sense.

The case illustrates that considering business common sense in contract interpretation still has a place despite the Supreme Court’s recent emphasis on giving effect to the natural meaning of wording, regardless of the consequences.

See Arnold v Britton and others [2015] UKSC 36

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