The High Court has interpreted genuinely ambiguous contractual terms in accordance with business common sense, in an interesting comparison with the recent Supreme Court decision in Arnold v Britton (covered hereon the blog).
The case concerned the proper construction of a contractual provision purporting to re-assign a claim in respect of a debt.
The court held as follows:
- It was not necessary to look beyond the words used if those words were only capable of one meaning. The court should not impose its own view of “business common sense”. This issue only came into play where the words used were capable of more than one meaning. In such a case, the court was entitled to prefer the construction more consistent with business common sense.
- The ambiguous provision should therefore be interpreted as applying to claims either arising under or incidental to the contract, rather than to any claims against any third party. This was a case where the parties could not have intended the words used to have their ordinary meaning.
Ace Paper Limited v Fry and others [2015] EWHC 1647 (Ch), 18 June 2015(currently only available from PLC – requires subscription)
