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Irish BCL Notes Irish Contract Law Notes

Interpretation Of Terms Notes

Updated Interpretation Of Terms Notes

Irish Contract Law Notes

Irish Contract Law

Approximately 126 pages

I prepared these notes for Trinity's Scholarship exams in Spring 2008. They contain all the major cases and legislation up to that time.

The focus in these notes is achieve compact and comprehensive case summaries. The notes are designed to be "standalone". I used much shorter notes in the weeks leading up to my exams, but frequently used these to recall details that were harder to discern from my shorthand notes.

Each case note sets out the facts, issues and key decision points in bullet f...

The following is a more accessible plain text extract of the PDF sample above, taken from our Irish Contract Law Notes. Due to the challenges of extracting text from PDFs, it will have odd formatting:

Interpretation of the Terms of Contracts

Investors Compensation Scheme v West Bromwich Building Society (HoL 1997)

Facts

  • A number of investors took out mortgages on their homes to invest money pursuant to financial advice, which resulted in their suffering large losses, and sought compensation from the plaintiffs, in exchange for which they assigned them the right to sue their financial advisers.

  • Clause 3 (b) read that the benefits of “Any claim (whether arising in recission for undue influence or otherwise)...in which you claim an abatement of sums which you would otherwise have to repay” would remain with the investors.

  • The argument was whether this reserved only the claim to an abatement of repayments arising out of recission for undue influence, or all abatements of repayments.

Issue

  • Interpretation – Primacy of Parties' Intentions - Meaning of Clause 3 (b)

Judgment

  • Lord Goff of Chieveley (concurring – fully with Lord Hoffman)

  • Lord Lloyd of Berwick (dissenting)

  • A useful means of ascertaining the meaning of this contract is to put oneself in the position of the ordinary person of the class to which it was addressed, i.e. the ordinary investor – this would indicate that the clause meant that the investor would retain his right to sue for a reduction of the mortgage debt.

  • There is no particular problem with the bracketed words being redundant – they bear one straightforward meaning and there is no need to adopt a purposive reading (especially where the purpose can not be identified with reasonable certainty.)

  • For the construction to be rejected by virtue of its legal and commercial consequences it would have to be extraordinary, very unreasonable or lead to a ridiculous result – in this case the consequences fall far short of it, indeed they potentially have rational bases.

  • Lord Hoffman (concurring)

  • In construing contractual documents, the court should aim to find the meaning which the document would convey to a reasonable person having all the background knowledge reasonably available to the parties, including anything that would affect how a reasonable man would have understood it.

  • The court is not obliged to ascribe to the parties an intention which plainly they could not have had, and can decide whether the parties have made mistakes of meaning or syntax – however the law will not easily accept that linguistic mistakes have been made.

  • The law excludes from consideration the previous negotiations of the parties and their declarations of subjective intent.

  • The explanatory note would be read by laymen and the claim form by a lawyer – the clause was evidently intended to prevent lawyers from seeking to make out that the reduction in repayments was a claim, when it would not be so regarded by a layperson.

  • The bracketed words may have an ordinary meaning but are used in an unnatural way – thus the court must choose between the unnatural meanings – the most likely meaning to fit the objective intentions of the parties is that the rights reserved are only those that arise out of recission for undue influence.

  • Lord Hope of Craighead (concurring)

  • Lord Clyde (concurring)

Analog Devices BV v Zurich Insurance Co (SC 2005)

Facts

  • The plaintiffs suffered financial loss due to the negligence of one of their employees in maintaining their equipment.

  • The defendants (insurers of the plaintiffs) refused to pay, pointing to an exemption clause which exempted them from liability for errors in faulty workmanship, processing or manufacturing and contamination and pollution, but not expressly errors in maintenance.

  • It was common practice in the industry to expressly exempt liability for negligent maintenance.

Issue

  • Interpretation – Primacy of Parties' Intentions

Judgment

  • Denham J (concurring)

  • Hardiman J (concurring)

  • Geoghegan J (concurring)

  • ICS v West Brom BS adopted – In construing a contract, the court must give effect to the intentions of the parties – these are to be ascertained objectively from the words used in the policies and taking into consideration the surrounding circumstances.

  • In considering the surrounding circumstances, the court is entitled to consider references to 'maintenance' in standard exclusion clauses in other policies used by the insurance industry.

  • The exclusion clauses in both policies related relating to contamination and pollution were intended to exclude only environmental damage.

Igote v Badsley (SC 2001)

Facts

  • The plaintiffs were the owners of shares in the defendant company and they claimed that an agreement that “the company shall distribute at least 40,000 during one share period” to the first subscriber i.e. the plaintiffs, amounted to a contractual obligation.

  • The defendants claimed that this referred to dividends only.

Issue

  • Interpretation – Parol Evidence Rule

Judgment

  • Keane CJ (concurring)

  • Denham J (concurring)

  • Murphy J

  • Contracts are construed so as to give effect to the intentions of the parties as revealed by the words used in the contract.

  • These words must be read with the surrounding circumstances in mind – however this does not mean that the subjective intentions of the parties should be taken into account when construing the contract.

  • The complicated background (arising out of the parties' desire to avoid liability for tax) to the case makes it of limited use in construing the words.

  • The word 'distribute' suggests that the payment is meant to be a dividend rather than a royalty.

  • The payment is also mentioned in the section governing dividends and the mechanics of its allocation also suggest it is a dividend.

Express Terms

Schawel v Reade (HoL 1912)

Facts

  • The plaintiff sought to buy a horse from the defendant, who showed a horse to the plaintiff and promised him that the horse was perfectly sound.

  • The plaintiff, who trusted the defendant, bought the horse and a later examination showed that the horse was not fit for purpose.

Issue

  • Express Terms – Statements...

Buy the full version of these notes or essay plans and more in our Irish Contract Law Notes.