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Cover Contract Law

11. The Interpretation of Contracts  

This chapter focuses on the principles applied by the courts when interpreting contracts. It examines the development of the modern law and focuses on three re-statements of the principles applied by the courts. The first is to be found in the judgment of Lord Hoffmann in Investors Compensation Scheme Ltd v. West Bromwich Building Society, the second is set out in the judgment of Lord Neuberger in Arnold v. Britton, and the third in the judgment of Lord Hodge in 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).