Contract Terms Clarified by Court

January 5, 2018

Contract Terms Clarified by Court

No amount of careful drafting can be guaranteed to iron out disagreements as to the true meaning of contract terms and when a dispute occurs it may require the intervention of a judge to bring clarity. One case exactly on point concerned a contract for the construction of an exceptionally large and expensive family home.

Members of the family, through their corporate vehicle, were in dispute with the contractor they had employed to work on the project because of substantial delays in its completion. They also considered that the delays made the contractor liable to pay them damages in compensation.

In particular, they could not agree on the correct interpretation of a contractual term concerning delays that were the fault of the contractor that occurred concurrently with 'no-fault' delays that were caused, for example, by weather conditions. In those circumstances, a definitive ruling from the High Court was required.

In upholding the family's arguments, the Court found that, on a true reading of the term, the contractor was not entitled to extensions of time in the event of concurrent delays. The wording of the clause was in fact crystal clear and meant that, where a delaying event for which the contractor was responsible occurred at the same time as a no-fault event, no extension of time could be claimed.

The contractor argued that such an interpretation would have unfair results and was not in accordance with the contract, read as a whole. However, the Court noted that the interpretation of the term was really very simple and that the parties had been free to agree whatever terms they wished.

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