This article challenges the orthodox view that, in adjudicating upon contract interpretation disputes, the task of the courts is to determine the parties presumed intention and that evidence of the parties’ actual mutual intention, usually to be found in their communications in the course of negotiating the contract, is irrelevant and inadmissible as an aid to interpretation. It is argued that, in any event, little of substance is left in the rule excluding evidence of prior negotiations once it is accepted that such evidence is admissible to prove that relevant background facts were known to the parties and that the safety devices of rectification and estoppel are alternative means of enforcing an agreed meaning. The courts are highly unlikely nowadays to give a meaning to contractual terms that is inconsistent with a clearly proven consensus of the parties.
A high proportion of the contract disputes that come before the courts involve issues of interpretation. These disputes also tend to be the most intractable. Very often the facts are complex,1
large sums are at stake and the “right” answer, which may hinge on “minute differences in wording”,2
is far from obvious. Inevitably, therefore, judges regularly disagree as to the meaning of the words, indeed sometimes even a single word, in dispute.3
Another feature of the great majority of these cases is that at the time of formation the parties did not contemplate the situation that later arose, let alone give any thought to the effect of the relevant words in that situation. There is no question, therefore, of their having formed any intention as to the meaning of the words. Accordingly, the court can only seek to resolve the dispute by reference to the parties’ presumed intention. As Thomas J has pointed out:4