ABSTRACT
It is important for contracting parties to identify the current interpretative default that English courts adopt, and to assess whether they would prefer to opt out of it by stipulating the interpretative method they would wish to be applied to their agreement. While the current default would seem to be contextual interpretation, the interpretation of the text remains the paramount concern. Courts will refer to the factual background of the contract, commercial purposes and so on, in an attempt to come to an understanding of the parties’ agreement, rather than engage in a detailed linguistic analysis of the words in the document. Although contextual interpretation is the current default, presently, the courts’ contextual enquiries are fairly limited. But it was noted in Chapter 3 that developments in the law on prior negotiations suggest that some expansion of the admissible context is imminent, if not already occurring. If this expanded contextualism becomes the relevant interpretative default, then parties that want a contextual or flexible approach to their agreement need do nothing. Provided the parties have some degree of trust in the courts to reach the decision that they would have agreed between themselves, they might leave much of their contract open-ended, with context (including negotiations, etc.) filling in the gaps. However, parties that would prefer a judge not to rely on ‘commercial instinct’, or extrinsic material may need to take steps to communicate this to the courts, rather than rely on the elusive ‘context’ to do this for them. In the choice between form or substance in contractual interpretation, an important influencing factor must be what the contracting parties would choose.1 Parties will of
course differ over how they perceive, and make, the trade-offs between form and substance.2 But it ought to be open to the parties to impose a parol evidence rule on their agreement, since they can no longer be sure that the rule represents the current interpretative default. This chapter assesses some of the methods the parties may employ to do this.
