Tor Line A.B. … v. Alltrans Group of Canada Ltd. (The "TFL PROSPERITY")

[1984] 1 Lloyd's Rep. (per Lord Roskill)

"Charter-parties are like any other contract and must be construed as such."

Segovia Compagnia Naviera S.A. v. R. Pagnan & Fratelli (The "ARAGON")

[1975] 2 Lloyd’s Rep. 216 (per Donaldson J)

"The respective rights and obligations of the two parties to that contract must depend upon its written terms and there is no special law applicable to a particular form of contract because it happens to be a time charter-party."

Sea & Land Securities, Ltd. v. William Dickinson & Co., Ltd (The "ALRESFORD")

[1942] 72 Ll.L.Rep. 159 (per Mackinnon LJ)

" ‘The object of all construction of the terms of a written agreement is to discover therefrom the intention of the parties to the agreement. The rules which govern the construction of contracts are the same at law and in equity, for simple contracts and for specialities’ - see Chitty on Contracts (27th ed.) par. 12-039. To the last sentence I would add ‘and for charter-parties’, since I know of no principle which requires the terms of charter-parties to be construed in a manner different to the terms of other commercial contracts."

"The approach of the English law to questions of the true construction of contracts of this kind is to seek objectively to ascertain the intentions of the parties from the words which they have chosen to use.

If those words are clear and admit of only one sensible meaning, then that is the meaning to be ascribed to them - and that meaning is taken to represent what the parties intended.

If the words are not clear and admit of more than one sensible meaning, then the ambiguity may be resolved by looking at the aim and genesis of the agreement, choosing the meaning which seems to make the most sense in the context of the contract and its surrounding circumstances as a whole.

In some cases, of course, having attempted this exercise, it may simply remain impossible to give the words any sensible meaning at all, in which case they (or some of them) are either ignored, that is to say, treated as not forming part of the contract at all, or (if of apparent central importance) treated as demonstrating that the parties never really made an agreement at all, that is to say, had never truly agreed upon the vital terms of their bargain.

In any of these cases, if it can be demonstrated that the parties were in fact agreed upon the terms of their bargain but by mistake wrote them down wrongly, then the law allows the contract to be rectified so as to accord with what was in fact agreed."

Vitol B.V. v. Compagnie Européene des Petroles [1988] 1 Lloyd’s Rep. 576 (per Saville J)

(lay-out modified, emphasis added)

" ... one hears much use made of the word "intention," but courts of law when on the work of interpretation are not engaged upon the task or study of what parties intended to do, but of what the language which they employed showed that they did; in other words, they are not constructing a contract on the lines of what may be thought to have been what the parties intended, but they are construing the words and expressions used by the parties themselves. What do these mean? That when ascertained is the meaning to be given effect to, the meaning of the contract by which the parties are bound. The suggestion of an intention of the parties different from the meaning conveyed by the words employed is no part of interpretation, but is mere confusion."

Great Western Railway v. Bristol Corpn. [1918] 87 L.J.Ch.414 (per Lord Shaw)

"The object sought to be achieved in construing any commercial contract is to ascertain what were the mutual intentions of the parties as to the legal obligations each assumed by the contractual words in which they (or brokers acting on their behalf) chose to express them; or, perhaps more accurately, what each would have led the other reasonably to assume were the acts that he was promising to do or to refrain from doing by the words in which the promises on his part were expressed."

B.T.P. Tioxide Ltd v. Pioneer Shipping Ltd. & Armada Marine S.A.(The "NEMA")

[1981] 2 Lloyd's Rep. 239 (per Lord Diplock)

"I must confess however that I am reluctant to speculate on the motives of a party for adopting a clause in any particular form. For once a clause is embodied in a commercial context, it has simply to be construed in its context, from the objective point of view of reasonable persons in the shoes of the contracting parties. Of course it has to be construed sensibly, and regard has to be had to its practical effect. But the objective interpretation is of paramount importance in commercial affairs; commercial men have frequently to take important decisions with some speed, and it of great importance that they all know that they can rely on Courts and arbitrators, if any dispute should later arise, to adopt the same objective approach as they themselves have to adopt in the daily administration of their contracts."

President of India v. Jebsens (UK) Ltd. and others [1991] 1 Lloyd’s Rep. 9 (per Lord Goff)

"I think it very probable that, in accepting the landlord’s construction, the learned judge has correctly assessed what the parties did indeed believe and desire to be the effect of [the clause]. But a court of construction can only hold that they intended it to have that effect if the intention appears from a fair interpretation of the words which they have used against the factual background known to them at or before the date of the lease, including its genesis and objective aim."

Philpots (Woking) Ltd. v. Surrey Conveyancers Ltd. [1986] 1 E.G.L.R. 97 (per Nourse LJ)

"Certainty of rights and duties, and predictability of dispute resolution, is the first imperative of a system of commercial law. It is of fundamental importance, not so as to ease the task of Judges, but because it enables businessmen and their advisers in the drafting and negotiating stage to consider properly the risks attendant upon an adventure, and to make suitable arrangements by way of contractual stipulations and the procuring of insurance cover. Moreover, certainty and predictability is also of vital importance when a dispute arises, so that in so far as it is possible, the way in which it will probably be resolved will not usually be a complete mystery to businessmen and their advisers."

"Over the last hundred years or so, there has grown up a large body of decided cases on the meaning of maritime contracts, ... (T)he result has been that, in almost every case about the interpretation of a maritime contract, the Courts are referred to earlier decisions upon the same form of words, or more often about a somewhat similar form of words.

This process has disadvantages. The first disadvantage is that it increases the length, cost and complexity of trials. ... The second disadvantage is that the language of contracts comes to mean something quite different from what the ordinary man in the street would expect it to mean. ...

A newcomer to the world of maritime contracts, or somebody who does not constantly consult his lawyer, is thus liable to discover that the contract means something quite different from what he, and perhaps his opposite number, reasonably and sensibly thought it meant."

Staughton: "Interpretation of Maritime Contracts" (JMLC, Vol.26, No.2, 1995)

" I think it would be wrong to treat the charter-party as if it were divided into parcels, each labelled with the name of an individual subject and constituting, as it were, a complete code on that subject. A charter-party is built up of clauses generally agreed in the trade; and when they are added to or varied from time to time, as not infrequently they are, I doubt that the commercial draftsmen pay much attention to overlapping or that they are afraid of repetition …"

Royal Greek Government v. Minister of Transport (The "ANN STATHATOS" ) [1950] 83 Ll.L.Rep.228 (per Devlin J)

"It is well established that clauses in charter-parties cannot be construed in isolation from each other. A charter-party like any other contract must be construed sensibly and in its entirety."

Cheikh Boutros Selim El-Khoury & Others v. Ceylon Shipping Lines, Ltd. (The "MADELEINE")

[1967] 2 Lloyd's Rep.224 (per Roskill J)

"The basic English rule for the construction of contracts of the present kind is to examine the words the parties have used in the context in which they have used them, in order to try and ascertain objectively what bargain the parties intended to make. The contract must be looked at as a whole in its context, rather than seeking to construe provisions in isolation, for to do otherwise is in effect to shut one's eyes to what the parties themselves actually did."

Daval Aciers d’Usinor et de Sacilor & Others v. Armare S.R.L. (The "NERANO")

[1996] 1 Lloyd's Rep. 1 (per Saville LJ)

"The interpretation of a written document is not an exercise in the arcane. It is a logical process in which the interpreter seeks to ascertain the intention of the draftsman as embodied in the instrument. The mutual intention of the parties to a bilateral contract is, of course, an abstraction. The primary method to find out what that abstraction was is to ask: what did the parties say? This does not mean picking away at words like a guinea fowl down a row of maize seed. One looks at the words used with commonsense and perspective."

Bekker No. v. Total South Africa (Pty) Ltd. [1990] 3 S.A. 159 (per Kriegler J)

"My Lords, the whole of this case, as it appears to me, turns upon the true construction of the contract which regulates the relations between the parties … I think that each part of the contract must be looked at with care, and that it must be remembered that in the construction of the contract we are not bound simply by the exact words. We must remember that it is a mercantile contract, and we must remember the nature of the subject-matter with respect to which each of the parties was contracting."

Hogarth v. Miller Brothers & Co. (H.L.) [1891] A.C. 48 (per Halsbury, LC)

"Before turning to the detail of the clause, I would mention certain general points which strike me on first looking at it. First, it is, I think, probably safe to infer, as the Judge did, that the [speed and consumption] clause is of commercial rather than legal draftsmanship. If that is so, then one should not approach the clause on the assumption that the practices and conventions of legal draftsmanship have necessarily been observed.

…. Sixth, the clause apparently represents a commercial bargain made between commercial men. The Court should seek to give effect to the intentions of the parties as expressed, even imperfectly, in an agreement of this kind if it can reasonably do so. It should avoid an over-rigorous legalistic approach and should not defeat the expressed intentions of the parties if these can be reasonably ascertained from the documents."

Didymi Corporation v. Atlantic Lines & Navigation Co.Inc. (The "DIDYMI")

[1988] 2 Lloyd's Rep. 108 (per Bingham LJ)

"Unhappily, bad grammar, bad drafting and verbal surplusage are common features in the drafting of clauses in charters."

Tor Line A.B ... v Alltrans Group of Canada Ltd. (The "TFL PROSPERITY") [1984] 1 Lloyd’s Rep. (per Lord Roskill)

"Constructions, however, leading to absurd and unreasonable results will be avoided, if this can be done without violence to the terms used, because, where intention is not clearly expressed, the parties are not to be presumed to have meant to make an absurd or unreasonable contract".

Inman Steamship Company, Limited v. Bischoff & others [1882] 7 App. Cas. 670 (per Lord Blackburn)

"The fact that a particular construction leads to a very unreasonable result must be a relevant consideration. The more unreasonable the result the more unlikely it is that the parties can have intended it, and if they do intend it, the more necessary it is that they shall make their intention abundantly clear."

L. Schuler A.G.v. Wickman Machine Tool Sales Ltd. [1973] 2 Lloyd’s Rep 53 (per Lord Reid)

"To the semantic analysis ... the arbitrators added an uncomplicated reason based simply upon business commonsense:

… While deprecating the extension of the use of the expression "purposive construction" from the interpretation of statutes to the interpretation of private contracts, I agree with the passage I have cited from the arbitrators’ award and I take this opportunity of re-stating that if detailed semantic and syntactical analysis of the 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."

Antaios Compania Naviera S.A. v. Salen Rederierna A.B. (The "ANTAIOS") (No.2)

[1984] 2 Lloyd’s Rep. 238 (per Lord Diplock)

"1. The remedy of rectification is available only for the putting right of a mistake in the terms of a document which purports to record a previous transaction. It is not an appropriate remedy where the mistake relates to the transaction itself rather than to the document which purports to record it.

2. Rectification may be granted in two situations:

3. The prior transaction may consist either of a concluded agreement or of a continuing common intention. In the latter event, the intention must be objectively manifested. It is the words and acts of the parties demonstrating their intention, not the inward thoughts of the parties, which matter.

4. The Court must be satisfied not only that the document fails to reflect the prior agreement or intention but also that there was a prior or common agreement (or intention) in terms which the Court can ascertain.

5. The Court requires the mistake to be proved with a high degree of conviction before granting relief."

Etablissements Georges et Paul Levy v. Adderley Navigation Co. Panama S.A. (The "OLYMPIC PRIDE")

[1980] 2 Lloyd's Rep. 67 (per Mustill J)

"To argue that practices adopted in the shipbuilding industry in Japan, for example as to sub-contracting, are relevant in the interpretation of a charter-party contract between two foreign shipping companies, whether or not these practices were known to the parties, is in my opinion to exceed what is permissible. But it does not follow that, renouncing this evidence, one must be confined within the four corners of the document. No contracts are made in a vacuum: there is always a setting in which they have to be placed. The nature of what is legitimate to have regard to is usually described as "the surrounding circumstances" but this phrase is imprecise: it can be illustrated but hardly defined. In a commercial contract it is certainly right that the Court should know the commercial purpose of the contract and this in turn presupposes knowledge of the genesis of the transaction, the background, the context, the market in which the parties are operating."

Reardon Smith Line Ltd. v. Yngvar Hansen-Tangen (The "DIANA PROSPERITY") [1976] 2 Lloyd’s Rep. 624 (per Lord Wilberforce)

"Courts will never construe words in a vacuum. To a greater or lesser extent, depending on the subject matter, they will wish to be informed of what may variously be described as the context, the background, the factual matrix or the mischief. To seek to construe any instrument in ignorance or disregard of the circumstances which gave rise to it or the situation in which it is expected to take effect is in my view pedantic, sterile and productive of error. But that is not to say that an initial judgment on what an instrument was or should reasonably have been intended to achieve should be permitted to override the clear language of the instrument, since what an author says is usually the surest guide to what he meant. To my mind construction is a composite exercise, neither uncompromisingly literal nor unswervingly purposive: the instrument must speak for itself, but it must do so in situ and not be transported to the laboratory for microscopic analysis."

Arbuthnott v. Fagan (1993) (unreported) (per Sir Thomas Bingham MR)

"The time has long since passed when agreements, even those under seal, were isolated from the matrix of facts in which they were set and interpreted purely on internal linguistic considerations. … We must inquire beyond the language and see what the circumstances were with reference to which the words were used, and the object appearing from those circumstances, which the person using them had in view."

Prenn v. Simmonds [1971] 1 W.L.R.1381 (per Lord Wilberforce)

"The persistence of shipping men ... in using terminology which has ceased to have any literal meaning may strike a lawyer as going beyond the bounds of the quaint and approaching those of perversity. Nevertheless, as Mr. Justice Devlin said in The "ADAMASTOS" ( [1957] 1 Lloyd’s Rep. 79)

In seeking to divine the deemed intentions of the parties – their actual intentions are happily irrelevant, since, were it otherwise, many, perhaps most, disputes upon points of construction would be resolved by holding that the parties were not ad idem – the Court has to place itself in thought in the same factual matrix as that in which the parties were and, so positioned, is justified in assuming that both parties intended by their words to further the commercial purpose of the charter-party and, in particular, the specific aspect of that purpose dealt with by the words under consideration."

Summit Investment Inc. v. British Steel Corporation (The "SOUNION") [1987] 1 Lloyd’s Rep. p.233 (per Sir John Donaldson M.R.)

" … in all cases, even where the words are in themselves plain and intelligible, and even where they have a strict legal meaning, it is always allowable, in order to enable the Court to apply the instrument to its proper object, to receive evidence of the circumstances by which the testator or founder was surrounded at the date of the execution of the instrument in question, not for the purpose of giving effect to any intention of the writer not expressed in the deed, but for the purpose of ascertaining what was the intention evidenced by the expressions used; to ascertain what the party has said; not to give effect to any intention he has failed to express."

Shore v. Wilson [1842] 9 Cl. & Fin.355 at 512 (per Erskine J)

"In all cases the object is to see what is the intention expressed by the words used. But, from the imperfection of language, it is impossible to know what that intention was without enquiring farther, and seeing what the circumstances were with reference to which the words were used, and what was the object, appearing from those circumstances, which the person using them had in view, for the meaning of words varies according to the circumstances with respect to which they were used."

River Wear Commissioners v. Adamson [1877] 2 App. Cas. 743 (per Lord Blackburn)

"There has grown up a tendency to speak about construing documents in or against what is described as the "factual matrix" in which the contract or document first saw the light of day. In truth that is only, I think, a modern way of saying what has been the rule for a long time that, in construing a document, one must look at all the circumstances surrounding the making of the contract at the time it was made. There is the danger, if one stresses reference to the "factual matrix," that one may be influenced by what is in truth a finding of the subjective intention of the parties at the relevant time, instead of carrying out what I understand to be the correct exercise, namely determining objectively the intent of the parties from the words of the documents themselves in the light of the circumstances surrounding the transaction. It is not permissible, I think, to take into account a finding of fact about what the parties intended a document to achieve when one is faced with problem some five, 10 or many years later of construing it."

Plumb Brothers v. Dolmac (Agriculture) Ltd [1984] 271 E.G. 373 (per May LJ)

"The fact that a particular construction leads to a very unreasonable result must be a relevant consideration. The more unreasonable the result the more unlikely it is that the parties can have intended it, and if they do intend it the more necessary it is that they shall make that intention abundantly clear.

This practical rule of thumb (if I may so describe it without disrespect) must however have its limits. There comes a point at which the Court should remind itself that the task is to discover what the parties meant from what they have said, and that to force upon the words a meaning which they cannot fairly bear is to substitute for the bargain actually made one which the Court believes could better have been made. …

Particularly in the field of commerce, where the parties need to know what they must do and what they can insist on not doing, it is essential for them to be confident that they can rely on the Court to enforce their contract according to its terms."

Charter Reinsurance Co. Ltd. v. Fagan [1996] 2 Lloyd’s Rep.119 (per Lord Mustill)

"In the first place, what may or may not be regarded as the ‘traditional position’, or as being reasonable or unreasonable, cannot be the starting point for construing a contract of this kind. The starting point must be the words and phrases the parties have chosen to use. It is not a permissible method of construction to propound a general or generally accepted principle for sharing the risk of delay between owners and charterers or seeking in the abstract to determine a reasonable allocation of risk of delay and then ... to seek to force the provisions of the charter into the straitjacket of that principle or into that concept of reasonableness. To do so is to rewrite the bargain that the parties must be taken to have made by the words that they have chosen to use."

Palm Shipping Inc. v. Kuwait Petroleum Corporation (The "SEA QUEEN") [1988] 1 Lloyd’s Rep. 502 (per Saville J)

"What the judge appears to have done is allow the background to create the uncertainty of meaning and then use it again to resolve that uncertainty in a manner which is, in my view at least, contrary to the plain meaning of the words. Such an approach is not in accordance with the authorities. ... It is not permissible to inquire into preliminary or background matter in order to find a different meaning; for that would amount to the Court holding that the parties really meant something different from what they chose to say."

Benjamin Developments Ltd. v. Robt. Jones (Pacific) Ltd. [1994] 3 N.Z.L.R. 189 (per Hardie Boys J)

"The Courts are well aware of the tendency of businessmen to retain in the documents they use inapplicable or outmoded expressions; and they endeavour, albeit with reluctance since the retention is inevitably a source of confusion, to give effect to what they take to be the true nature of the document. There are well established rules of construction which permit the Court to disregard printed words when they are inconsistent with written words or with the paramount object which the document appears from its language to be designed to achieve. But these rules can be used only when there is a conflict between one part of the document and another or between the effect of a part and the effect of the whole. They are rules for reconciling different expressions in or of the document itself. They cannot be used to introduce into the document, either by implication or by force of custom, what is outside it."

Kum & Another v. Wah Tat Bank Ltd. [1971] 1 Lloyd's Rep. 439 (per Lord Devlin)

"... (I)t is important never to forget the purpose of the process of interpretation. It is to assign to the language chosen by the parties the most appropriate meaning which the words can legitimately bear ... But the interpretation must not become a route to supplementing or changing the contractual régime which the parties have chosen by the language appearing above their signatures. That is an end which can only be achieved by implication, in law or fact, of a term into the chosen language of the parties. That process can, however, only be pressed into service if the implication is essential to make the contract work, or if it is entirely obvious."

P.&O. Property Holdings Ltd. v. Norwich Union Life Ass. Soc. plc [1993] 1 E.G.L.R. 164 (per Steyn LJ)

"In construing all written instruments, the grammatical and ordinary sense of the words is to be adhered to, unless that would lead to some absurdity, or some repugnance or inconsistency with the rest of the instrument, in which case the grammatical and ordinary sense of the words may be modified, so as to avoid that absurdity and inconsistency, but no further."

Grey v. Pearson [1857] 6 H.L.Cas. 61 (per Lord Wensleydale)

"It (sc. a written instrument) is to be construed according to its sense and meaning as collected in the first place from the terms used in it, which terms are themselves to be understood in their plain and popular sense, unless they have generally in respect to the subject matter, as by the known usage of a trade, or the like, acquired a peculiar sense of the same words; or unless the context evidently points out that they must in a particular instance, and in order to effectuate the intention of the parties to that contract, be understood in some other special and peculiar sense."

Robertson v. French [1803] 4 East. 130 (per Lord Ellenborough CJ)

" ‘Showground’ is a word of normal parlance; not a term of art requiring interpretation with expert assistance. It is a word to be interpreted by the judge, using his knowledge of the language, and his acquaintance with accepted applications of the word to situations arising in the normal life of the community in which he lives. Judicial knowledge is the knowledge of the ordinary wide-awake man, used by one who is trained to express it in terms of precision."

Brisbane City Council v. Attorney-General for Queensland [1979] A.C. 411 (per Lord Wilberforce)

"Subject to any legal requirements businessmen are free to make what contracts they choose but unless the terms of their agreement are clear a Court will not be disposed to accept that they have agreed something utterly fantastic. If it is clear what they have agreed a Court will not be influenced by any suggestion that they would have been wiser to have made a different agreement.

If a word employed by the parties in a contract can have only one possible meaning then, unless any question of rectification arises, there will be no problem. If a word either by reason of general acceptance or by reason of judicial construction has come to have a particular meaning then, if used in a business or technical document, it will often be reasonable to suppose that the parties intended to use the word in its accepted sense. But if a word in a contract may have more than one meaning then, in interpreting the contract, a Court will have to decide what was the intention of the parties as revealed by or deduced from the terms and subject-matter of their contract.

Words are but the instruments by which meanings or intentions are expressed. Often the same word has in differing contexts to do service to convey differing meanings."

L. Schuler A. G. v. Wickman Machine Tool Sales Ltd. [1973] 2 Lloyd's Rep. 53 (per Lord Morris) (layout modified)

"I think that in some cases the notion of words having a natural meaning is not a very helpful one, because the meaning of words is so sensitive to syntax and context, the natural meaning of words in one sentence may be quite unnatural in another. Thus a statement that words have a particular natural meaning may mean no more than that in many contexts they will have that meaning. In other contexts their meaning will be different but no less natural."

Charter Reinsurance Co. Ltd. v. Fagan [1996] 2 Lloyd’s Rep. 121 (per Lord Hoffmann)

"... It is a matter of constant experience that people can convey their meaning unambiguously although they have used the wrong words. We start with an assumption that people will use words and grammar in a conventional way but quite often it becomes obvious that, for one reason or another, they are not doing so and we adjust our interpretation of what they are saying accordingly. We do so in order to make sense of their utterance: so that the different parts of the sentence fit together in a coherent way and also to enable the sentence to fit the background of facts which plays an indispensable part in the way we interpret what anyone is saying. ...

It is of course true that the law is not concerned with the speaker’s subjective intentions. But the notion that the law’s concern is therefore with the ‘meaning of his words’ conceals an important ambiguity. The ambiguity lies in a failure to distinguish between the meanings of words and the question of what would be understood as the meaning of a person who uses words. The meaning of words, as they would appear in a dictionary, and the effect of their syntactical arrangement, as it would appear in a grammar, is part of the material which we use to understand a speaker’s utterance. But it is only a part; another part is our knowledge of the background against which the utterance was made. It is that background which enables us, not only to choose the intended meaning when a word has more than one dictionary meaning but also, in the ways I have explained, to understand a speaker’s meaning, often without ambiguity, when he has used the wrong words.

When, therefore, lawyers say that they are concerned, not with the subjective meaning but with the meaning of the language which the speaker has used, what they mean is that they are concerned with what he would objectively have been understood to mean. ..."

Mannai Investment Co. Ltd. v. Eagle Star Assurance [1997] 2 W.L.R. 945 (per Lord Hoffmann)

"Dictionaries never solve concrete problems of construction. The meaning of words cannot be ascertained divorced from their context. And part of the contextual scene is the purpose of the provision."

Arbuthnott v. Fagan [1993] (unreported) (per Steyn LJ)

"Once a Court has put a construction on commercial documents in standard form, commercial men act upon it. It should be followed in all subsequent cases. If the business community is not satisfied with the decision, they should alter the standard form."

The "ANNEFIELD" [1971] 1 Lloyd's Rep.1 (per Lord Denning MR)

"It is also a well recognized principle that Courts do not distinguish between similar forms of wording unless there are significant differences between them. Mere verbal changes in the way a well known clause is expressed do not form the basis for attributing a different meaning to the clause."

Skips A/S Nordheim & Others v. Syrian Petroleum Co. Ltd. & Petrofina S.A. (The "VARENNA")

[1983] 1 Lloyd's Rep. 416 (per Hobhouse J)

"There is … another rule of construction which one would bring to bear upon this charterparty, and that is, that one must see if this stipulation which we have got to construe is introduced by way of exception or in favour of one of the parties to the contract, and if so, we must take care not to give it an extension beyond what is fairly necessary, because those who wish to introduce words in a contract in order to shield themselves ought to do so in clear words"

Burton & Co. v. English [1883] 12 Q.B.D. 218 (per Bowen LJ)

"The general rule is that where there is any doubt as to the construction of any stipulation in a contract, one ought to construe it strictly against the party in whose favour it has been made."

Burton & Co. v. English [1883] 12 Q.B.D. 218 (per Brett MR)

"…[T]he cardinal rule, if I may call it such, in interpreting such a charter-party as this, is that the charterer will pay hire for the ship unless he can bring himself within the exceptions. I think he must bring himself clearly within the exceptions. If there is a doubt as to what the words mean, then I think those words must be read in favour of the owners because the charterer is attempting to cut down the owner’s right to hire."

Royal Greek Government v. Minister of Transport (The "ILISSOS") [1949] 82 Ll.L.Rep.196 (per Bucknill LJ)

"It is a well known canon of construction, that where a particular enumeration is followed by such words as ‘or other’, the latter expression ought, if not enlarged by the context, to be limited to matters eiusdem generis with those specifically enumerated."

Sun Fire Office v. Hart [1889] 14 App.Cas. 98 (per Lord Watson)

"Yet Lord Justice Scrutton points out in his work on Charter-parties as follows:

This, I most respectfully think, is a most cogent, useful and accurate statement. I need only add that the comparative ease with which the ejusdem generis rule can be prevented from applying is shown by Larsen v. Sylvester, … (1908, Appeal Cases, 295), where the words "of what kind soever" were held sufficient for that purpose."

Owners of steamship "MAGNHILD" v. Macintyre Bros. & Co. [1920] 4 Ll.L.Rep. 130 (per McCardie J)

"Draftsmen of charter-parties whether of the printed form or of the typewritten clause, but perhaps especially of the latter are probably not consciously familiar even with the idea of ejusdem generis. This charter-party refers, for example, to ‘a full and complete cargo of wheat and/or maize and/or other lawful merchandise.’ Nobody has ever, I think, suggested that the merchandise has to be similar to wheat or maize; although the first question which would occur to a lawyer would be to ask himself why the parties bothered to refer to wheat or maize if they meant that the cargo might be anything from chalk to cheese, including turpentine.

I apply the principle laid down in Anderson v. Anderson*… and so inquire whether there is anything in the text of this charter-party or in the circumstances in which it was made which would lead me to suppose that the parties intended ‘other dangerous cargo’ to have some limited meaning. I can find no such indication. It seems to me that the only reason why the owner is objecting to acids, explosives, arms or ammunition is because they are dangerous; and that being so he may be presumed to have the same objection to all other dangerous cargo."

Chandris v. Isbrandtsen-Moller Company Inc.(The "EVGENIA CHANDRIS") [1950] 83 Ll.L.Rep. 385 (per Devlin J)

(The issue here concerned the true meaning of the following provision: "Cargo to consist of lawful general merch-andise, excluding acids, explosives, arms, ammunition or other dangerous cargo.")

"... the words superadded in writing (subject indeed always to be governed in point of construction by the language and terms with which they are accompanied), are entitled nevertheless, if there should be any reasonable doubt upon the sense and meaning of the whole, to have a greater effect attributed to them than to the printed words, inasmuch as the written words are the immediate language and terms selected by the parties themselves for the expression of their meaning, and the printed words are a general formality adapted equally to their case and that of all other contracting parties upon similar occasions and subjects."

Robertson & Thompson v. French [1803] 4 East 130 (per Lord Ellenborough)

"Clause 18 … is a typed clause, whereas clause 8 is a printed clause; and where there is a conflict between two such clauses it is well established that the typed clause should prevail."

Bravo Maritime (Chartering) Est. v. Alsayed Abdullah Mohamed Baroom (The "ATHINOULA")

[1980] 2 Lloyd's Rep. 481 (per Mocatta J)

"It is firmly established as a rule of law that parol evidence cannot be admitted to add to, vary or contradict a deed or other written instrument. Accordingly, it has been held that (except in cases of fraud or rectification…) parol evidence will not be admitted to prove that some particular term, which had been verbally agreed upon, had been omitted (by design or otherwise) from a written instrument constituting a valid and operative contract between the parties."

Jacobs v. Batavia & General Plantations Ltd. [1924] 1 Ch. 287 (per P.O.Lawrence J)

"This was said to be evidence of surrounding circumstances to which recourse could be had in interpreting the contract. In truth the evidence is not evidence of surrounding circumstances; it is evidence of antecedent oral negotiations and expectations of the parties and as such it cannot be used for the purpose of construing the words of a written contract intended by the parties to comprehensively record the terms of the agreement which they have made."

Secured Income Real Estate (Australia) ltd. v. St. Martins Investments Pty. Ltd. [1979] 144 C.L.R. 596 (per Mason J)

"The general rule is that when a contract has been reduced into writing, evidence of previous negotiations is not admissible in order to construe it. That rule was emphatically reaffirmed in Prenn v. Simonds."

Arrale v. Costain Civil Engineering Ltd. [1976] 1 Lloyd’s Rep. 98 (per Lord Denning MR)

"The reason for not admitting evidence of these exchanges is not a technical one or even mainly of convenience … It is simply that such evidence is unhelpful. By the nature of things, where negotiations are difficult, the parties’ positions, with each passing letter are changing and until the final agreement, though converging, still different. It is only the final document which records a consensus. If the previous documents use different expressions, how does construction of those expressions, itself a doubtful process, help on the construction of the contractual words? If the same expressions are used, nothing is gained by looking back; indeed something may be lost since the relevant surrounding circumstances may be different. And at this stage there is no consensus of the parties to appeal to."

Prenn v. Simmonds [1971] 1 W.L.R. 1381 (per Lord Wilberforce)

"If a contract contains words which, in their context, are fairly capable of bearing more than one meaning, and if it is alleged that the parties have in effect negotiated on an agreed basis that the words bore only one of the two possible meanings, then it is permissible for the Court to examine the extrinsic evidence relied upon to see whether the parties have in fact used the words in question in one sense only, so that they have in effect given their own dictionary meaning to the words as the result of their common intention. Such cases would not support a claim for rectification of the contract, because the choice of words in the contract would not result from any mistake. The words used in the contract would ex hypothesi reflect the meaning which both parties intended."

Partenreederei M.S. Karen Oltmann v. Scarsdale Shipping Co. Ltd. (The "KAREN OLTMANN")

[1976] 2 Lloyd's Rep. 708 (per Kerr J)

"There is a controversy as to whether one can ever look at deleted words in an agreement. If the words were first inserted by the draftsman of the agreement and then deleted before signature then I have no doubt that they must not be considered in construing the agreement. They are in the same position as any other preliminary suggestion put forward and rejected before the final agreement was made. But it appears to me that striking out words from a printed form is quite a different matter. The process of adapting a printed form to make it express the parties' intentions requires two things to be done. Those parts which are not to be part of the agreement are struck out and words are inserted to complete the rest of the form so as to express the agreement. There is no inference that in striking out words the parties had second thoughts: the words struck out were never put there by the parties or any of them or by their draftsman. I must not express a concluded opinion because for some reason this question was not argued by Counsel on either side. But fortunately in this case the result is the same on any view,…"

London & Overseas Freighters Ltd. v. Timber Shipping Company S.A.

[1971] 1 Lloyd's Rep. 523 (per Lord Reid, obiter)

"… the use of a word or phrase in the deleted part of the clause may throw light on the meaning of the same word or phrase in what remains of the clause … But it seems to me quite another thing to say that the deletion itself has any contractual significance; or that by deleting a provision in a contract the parties must be deemed to have agreed the converse. The parties may have had all sorts of reasons for deleting the provision; they may have thought it was unnecessary; they may have thought it inconsistent with some other provision in the contract; it may even have been deleted by mistake."

Mineralimportexport &c v. Eastern Mediterranean Maritime Ltd. (The"GOLDEN LEADER")

[1980] 2 Lloyd's Rep. 573 (per Lloyd J)

"When the parties use a printed form and delete parts of it one can, in my opinion, pay regard to what has been deleted as part of the surrounding circumstances in the light of which one must construe what they have chosen to leave in."

Mottram Consultants Ltd. v. Sunley (Bernard) & Sons. Ltd. [1975] 2 Lloyd’s Rep.197 (per Lord Cross)

"The Court's task, when construing a contract, is to ascertain the intention of the parties. Occasionally one finds that "the parties have expressed themselves so badly that the Court is unable to give their language any sensible meaning, but those cases are rare and to reject the language used by the parties as insensible is, in my view, a position of last resort."

Shell International Petroleum Co. Ltd. V. Coral Oil Co. Ltd. [1999] 1 Lloyd's Rep. 76 (per Moore-Bick, J.)

"We have on a few occasions rejected a sentence as meaningless…. But this is only when it is impossible to make sense of it. Rather than find it meaningless, we should strive to find out what was really intended by amending the punctuation, or by supplying words, and so forth. ... To me the explanation is obvious. Someone in the trade wrote out the clause in handwriting, or dictated it. The typist got it down wrong. Her draft was never revised properly. So it got inserted in a defective form. It must obviously be put right. The Judge seems to have thought that it could not be done without rectification. That would indeed be making a mountain out of a molehill. We should trample down the molehill."

Tropwood A.G. of Zug v. Jade Enterprises Ltd. (The "TROPWIND")

[1982] 1 Lloyd's Rep. 232 (Per Lord Denning MR)

"The essential task in construction is to deduce, if this is possible, from the two agreements construed as a whole against their commercial background the commercial purpose which the businessmen and entities who were parties to them must as a matter of business common sense have intended to achieve by entering into them; and if such intent can fairly be deduced and if this is necessary to effectuate that intent, the Court may have to require what may appear to be errors or inadequacies in the choice of language to yield to that intention and be understood as saying what (in the light of that purpose) that language must reasonably be understood to have been intended to mean."

Don King Productions Ltd. v. Warren & Others [1998] 2 Lloyd’s Rep.176 (per Lightman J)

"[The judge] held that the more natural meaning of the words was that for which the investors contend; in other words that the exception covers all possible claims … However, he went on to reject what he regarded as the more natural meaning of the words on the ground that it produced a ‘ridiculous’ result, contary to the ‘demonstrable purpose of the parties …’"

Investors Compensation Scheme Limited v. West Bromwich Building Society & Others

[1998] 1 W.L.R 912 (per Lord Lloyd)

"In the Court of Appeal, Leggatt LJ 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.

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 this branch of the law … 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 common sense principles by which any serious utterance would be interpreted in ordinary life. Almost all of the old intellectual baggage of ‘legal’ interpretation has been discarded. The principles may be summarised as follows:

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.
2. The background was famously referred to … 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 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.
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. ...

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. …

(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. ..."

Investors Compensation Scheme Limited v. West Bromwich Building Society & Others

[1998] 1 W.L.R. 912 (per Lord Hoffmann)

"The objection to the plain meaning is the inclusion of the words "for undue influence" after "rescission"; for any lawyer would know that there are other grounds on which the investor might claim rescission, for example, on the ground of misrepresentation. Why, therefore, should the draftsman have specifically included one of the grounds on which the investor might claim rescission, but not others? ...

(The appellant) submits that section 3(b) means ‘any claims sounding in rescission (whether for undue influence or otherwise) ...’. I know of no principle of construction ... which would enable the Court to take the words from within the brackets, where they are clearly intended to underline the width of ‘any claim’, and place them outside the brackets where they have the opposite effect. As Leggatt LJ said in the Court of Appeal, such a construction is simply not an available meaning of the words used; and it is, after all, from the words used that one must ascertain what the parties meant. Purposive interpretation of a contract is a useful tool where the purpose can be identified with reasonable certainty. But creative interpretation is another thing altogether. The one must not be allowed to shade into the other."

Investors Compensation Scheme Limited v. West Bromwich Building Society & Others

[1998] 1 W.L.R. 912 (per Lord Lloyd, dissenting)

"For my part, I do not read either of the speeches of Lord Hoffmann as departing from the approach of Lord Wilberforce in Prenn v. Simmonds … as [Counsel] suggested…

Lord Hoffmann was simply overruling old and outdated cases by reference to an approach on construction which has been followed in the Commercial Court for many years."

NLA Group Ltd. v. Bowers [1999] 1 Lloyd’s Rep. 109 (per Walker J)

"A written contract is so far conclusive as to the terms of the contract expressed in it that apart from rectification, and the terms implied by law, what is not expressed in it cannot be part of its terms.

To this there is an exception that customs of a trade which regulate the performance of the contract, but do not change its intrinsic character, are tacitly incorporated in the contract, though not expressed in it, on the ground that the parties to the contract must be presumed to have contracted with reference to such customs.

Customs of trade may control the mode of performance of a contract, but cannot change its intrinsic character. Thus if the express terms of the charter are inconsistent with the alleged custom, evidence of the custom will not be admissible….

Customs to be enforced by the courts must be – (1) reasonable; (2) certain; (3) consistent with the contract; (4) universally acquiesced in; (5) not contrary to law."

Scrutton on Charter Parties (18^th Edn) 14

"‘Usage’ may be admitted to explain the language used in a written contract or to add an implied incident to it, provided that if expressed in the written contract it would not make its terms or its tenor insensible or inconsistent … ‘Usage’ is apt to be used confusingly in the authorities, in two senses: (1) a practice, and (2) a practice which the court will recognise….

‘Usage’ as a practice which the court will recognise is a mixed question of fact and law. For the practice to amount to such a recognised usage, it must be certain, in the sense that the practice is clearly established; it must be notorious, in the sense that it is so well known in the market in which it is alleged to exist, that those who conduct business in that market contract with the usage as an implied term; and it must be reasonable."

Cunliffe-Owen v. Teather & Greenwood [1967] 1 W.L.R. 1421 (per Ungoed-Thomas J)

"I have for a long time understood that rule to be that the Court has no right to imply in a written contract any such stipulation, unless, on considering the terms of the contract in a reasonable and business manner, an implication necessarily arises that the parties must have intended that the suggested stipulation should exist."

Hamlyn v. Wood [1891] 2 Q.B. 488 (per Lord Esher)

"Their Lordships do not think it necessary to review exhaustively the authorities on the implication of a term of a contract which the parties have not thought fit to express. In their view, for a term to be implied, the following conditions (which may overlap) must be satisfied:

1. it must be reasonable and equitable;
2. it must be necessary to give business efficacy to the contract, so that no term will be implied if the contract is effective without it;
3. it must be so obvious that it ‘goes without saying’;
4. it must be capable of clear expression;
5. it must not contradict any express term of the contract."

BP Refinery (Westernport) Pty Ltd v. The Shire of Hastings

1978] 52 AJLR 20 (per Lord Simon) (Lay-out modified)

"This passage [sc. in BP Refinery v. Shire of Hastings] ... distils the essence of much learning on implied terms. But its simplicity could be almost misleading.

The Courts’ usual role in contractual interpretation is, by resolving ambiguities or reconciling apparent inconsistencies, to attribute the true meaning to the language in which the parties have expressed their contract. The implication of contract terms involves a different and altogether more ambitious undertaking: the interpolation of terms to deal with matters for which, ex hypothesi, the parties themselves have made no provision. It is because the implication is so potentially intrusive that the law imposes strict constraints on the exercise of this extraordinary power."

Philips Electronique Grand Public SA and another v. British Sky Broadcasting Limited

[1995] E.M.L.R. 472 (per Sir Thomas Bingham, M.R.)

"In my judgment, the implied term argued for in this case fails to satisfy three of the five conditions referred to by Lord Simon, although all must be satisfied before the ‘extraordinary power’ can be exercised."

Rembrandt Group Limited v. Philip Morris international Incorporated

[1997] (unreported) (per Rimer J) (Emphasis added)

"Faced with this abuse of power, by the strong against the weak, by the use of the small print of the conditions, the judges did what they could to put a curb on it. They still had before them the idol, ‘freedom of contract.’ They still knelt down and worshipped it, but they concealed under their cloaks a secret weapon. They used this to stab the idol in the back. This weapon was called ‘the true construction of the contract.’ They used it with great skill and ingenuity. They used it to depart from the natural meaning of the words of the exemption clause and to put on them a strained and unnatural construction. In case after case, they said that the words were not strong enough to give the big concern exemption from liability, or that in the circumstances the big concern was not entitled to rely on the exemption clause. If a ship deviated from the contractual voyage, the owner could not rely on the exemption clause. If a warehouseman stored goods in the wrong warehouse, he could not pray in aid the limitation clause. If the seller supplied goods different in kind than those contracted for, he could not rely on any exemption from liability. If a shipowner delivered goods to a person without production of the bill of lading, he could not escape liability by reference to an exemption clause. In short, whenever the wide words, in their natural meaning, would give rise to an unreasonable result, the judges either rejected them as repugnant to the main purpose of the contract or else cut them down to size in order to produce a reasonable result."

Mitchell (George) (Chesterhall) Ltd. v. Finney Lock Seeds Ltd

[1983] Q.B. 284 (per Lord Denning MR)

"The truth is that all these three – duty, remoteness and causation – are all devices by which the courts limit the range of liability for negligence or nuisance. As I said recently, in [another case] ... ‘It is not every consequence of a wrongful act which is the subject of compensation. The law has to draw a line somewhere.’ Sometimes it is done by limiting the range of persons to whom a duty is owed. Sometimes it is done by saying that there is a break in the chain of causation. At other times it is done by saying that the consequence is too remote to be a head of damage. All these devices are useful in their way. But ultimately it is a question of policy for the judges to decide."

Lamb v. Camden Council London Borough Council

[1981] 1 Q.B. 625 (per Lord Denning MR)