7. Interpreting the terms

Abstract

This chapter considers how the courts make sense of contracts whose terms are capable of more than one interpretation. It begins by discussing two broad approaches to construing contracts, both of which have influenced English law and both of which continue to form part of the law: literalism and contextualism. It then examines the role English law currently assigns to literalism and contextualism and how the courts decide which to apply, with particular emphasis on the Investors rule and contextual readings. It also evaluates an alternate remedy known as rectification and concludes with an analysis of the limits of construction and the law of mutual mistake.