11. The Interpretation of Contracts

Abstract

This chapter focuses on the principles applied by the courts when interpreting contracts, as set out by the House of Lords in Investors Compensation Scheme Ltd v. West Bromwich Building Society and the Supreme Court in Arnold v. Britton and Wood v. Capita Insurance Services Ltd. The chapter discusses the scope of these principles (in particular, the ‘factual matrix’, the exclusion of pre-contractual negotiations, the meaning of words, ‘corrective interpretation’, and the balance to be struck between the natural and ordinary meaning of the words and giving to the words a commercial sensible construction.