Commercial Contracts: The Uncertainty of Construction


Although disputes between contracting parties about the meaning of their documents have always been common, such disputes have been particularly prominent of late in the context of complex debt restructurings.

The modern approach to contractual interpretation is derived from the speeches of the recently retired Lord Hoffmann in the Investors Compensation Scheme (1998) and Chartbrook v Persimmon (2009) cases. In summary, a Court’s task when faced with a dispute over the meaning of a contractual provision is to decide what the “reasonable person”, having all the background knowledge available to the parties, would have understood the words to mean at the time the contract was entered into.

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