- •Contents
- •Interpretation of contracts
- •A. Principles of interpretation
- •Start (and end) with what the contract says
- •Parties' intention assessed objectively
- •Business common sense
- •The commercial purpose
- •Reasonableness
- •The whole contract approach
- •Correcting mistakes by construction
- •Diminishing role for strict interpretation
- •Directory and mandatory provisions
- •Inconsistent provisions
- •Same approach in law and equity
- •B. Continuing relevance of traditional rules of construction
- •Lawful effect
- •A party may not take advantage of its own wrong
- •Excluding or modifying legal remedies
- •Strict interpretation against one party (contra proferentem)
- •The express excludes the implied (expressio unius rule)
- •General words at the end of a list (the ejusdem generis rule)
- •Section 61 Law of Property Act 1925 presumptions
- •C. Relevant and admissible background
- •D. Precedent value of cases
- •Implied terms
- •A. Usage or custom
- •B. Previous course of dealings
- •C. Terms implied in fact
- •Business efficacy and officious bystander tests
- •Bp Refinery
- •Philips Electronique
- •Marks and Spencer
- •Admissible background
- •Certainty
- •Implication of terms compared with interpretation/construction and rectification for mistake
- •D. Terms frequently implied in fact
- •Right to terminate an indefinite contract
- •Contractual discretion must not be exercised arbitrarily
- •E. Good faith
- •F. Terms implied at common law
- •G. Terms implied by statute
- •H. Excluding implied terms
- •Misrepresentation a. What is a misrepresentation?
- •Types of representee
- •Misrepresentation of law
- •Statement of opinion
- •Implied representations
- •Silence
- •Other requirements for an effective misrepresentation
- •Intention to induce
- •B. Types of misrepresentation
- •Fraudulent misrepresentation
- •Negligent misrepresentation
- •Innocent misrepresentation
- •C. Remedies for misrepresentation
- •Rescission
- •Damages for misrepresentation
- •Innocent misrepresentation
- •D. Negligent misstatement at common law
- •E. Can a representation become a term of the contract?
- •F. Limiting liability for misrepresentation
- •Clauses in contracts
- •Entire agreement clauses
- •Structure and terms of commercial contracts a. Form
- •B. Skeleton structure
- •Front and cover page, back sheet
- •Commencement section and dates
- •Parties
- •Background, recitals, or preamble
- •Operative provisions
- •Preliminary clauses
- •Interpretation
- •Performance obligations
- •Payment obligations
- •Limitations and exclusions of liability
- •Subsidiary obligations
- •Boilerplate
- •Schedules, appendices and other attachments
- •Execution
B. Skeleton structure
The following is an outline of the structure of a basic commercial contract in traditional format:
Front and cover page, back sheet.
Commencement section and dates.
Parties.
Background.
Operative part.
Definitions.
Conditions precedent.
Performance obligations.
Payment obligations.
Limitations and exclusions.
Subsidiary obligations.
Boilerplate.
Schedules.
Execution.
The remainder of this note follows the structure of this basic skeleton and highlights the function of each part of the contract and the sort of issues which should be covered in each part.
This practice note applies to all sorts of contracts. However, for the sake of convenience, the parties are sometimes referred to as "supplier" and "customer", because so many contracts involve one party doing something, and the other party paying for it.
Front and cover page, back sheet
Most commercial contracts in the traditional format start with a front or cover page setting out a limited amount of information:
Date of the agreement.
Parties.
Name of the agreement.
Name of lawyers drafting the agreement, with reference and contact details (now most usually seen in long and complex agreements, or in property transactions).
Commencement section and dates
A commercial contract will normally begin with an introduction. This introduction repeats the title of the document and its nature (for example, "This Underwriting Agreement" or "This Deed of Tax Indemnity").
If the parties intend to create a deed then the commencement section is useful as it helps to make it clear on the front page and at the start of the text that it is a deed (a necessary requirement for any deed).
A variety of dates can be included within a contract:
Contract date. A date at the start of the agreement, and/or on the cover page, and/or on the back sheet, which, either expressly or by implication, purports to indicate (correctly or incorrectly) the date on which the contract was made.
Signature date. A date below or near the signature of a party, indicating the date on which that individual party signed.
Defined effective dates (including defined commencement dates and start dates). A date or dates within the body of a contract which indicate when the contract or parts of the contract are intended to have legal effect, if that date is to be other than the date of execution.
Parties
The parties to the contract are named in the parties clause. Full names and addresses (or registered office and number in the case of a company or limited liability partnership) should be inserted.
Only parties to the contract should be named within the parties section: confusion can arise if references are made to holding companies, subsidiaries, or affiliates in the parties section, if the reference is merely background information and such companies are not intended to be parties. If it is relevant to supply descriptive information about a party, this is best included in the recitals.