The court is entitled to know the surrounding circumstances which prevailed when the contract was made. A contract is not to be construed in a vacuum. The term ‘market’ did not have a ‘fixed legal significance’ .
Lord Dunedin said: ‘in order to construe a contract the court is always entitled to be so far instructed by evidence as to be able to place itself in thought in the same position as the parties to the contract were placed, in fact, when they made it – or, as it is sometimes phrased, to be informed as to the surrounding circumstances.’
Lord Kinnear, discussing the meaning of the expression ‘fair market price’, stated: ‘Words of this kind must vary in their signification with the particular objects to which the language is directed ; and it follows that a contract about a market price cannot be correctly interpreted or applied without reference to the facts to which the contract relates . . Evidence is not admissible to put a peculiar meaning upon plain and unambiguous words. But it may be necessary to prove the relation of the document to the facts; and I take to be sound doctrine that for this purpose evidence may be given to prove any fact to which it refers, or may probably refer, or to identify any person or thing mentioned in it’.
Judges:
Lord Dunedin, Lord Kinnear
Citations:
[1914] AC 71
Jurisdiction:
England and Wales
Cited by:
Cited – Scottish Power Plc v Britoil (Exploration) Limited CA 18-Nov-1997
Five contracts existed regarding sale of natural gas from a field in the North Sea. The parties disputed whether the terms prevented the sale of gas to others.
Held: ‘On the language of the contract, the Sellers are not entitled to sell gas to . .
Cited – Norwich City Council v Marshall LT 23-Oct-2008
LT LANDLORD AND TENANT – service charges – liability – whether lessee liable for management costs – held lessee liable for costs incurred in providing specified services under lease but not otherwise – Landlord . .
Explained – Reardon Smith Line Ltd v Yngvar Hansen-Tangen (The ‘Diana Prosperity’) HL 1976
In construing a contract, three principles can be found. The contextual scene is always relevant. Secondly, what is admissible as a matter of the rules of evidence under this heading is what is arguably relevant, but admissibility is not decisive. . .
Cited – Islam, Regina v HL 10-Jun-2009
The defendant appealed against a confiscation order saying that it should not have been set at values which reflected the black market value of the drugs he had imported.
Held: The appeal failed. The court could take account of the illegal . .
Lists of cited by and citing cases may be incomplete.
Contract
Updated: 07 May 2022; Ref: scu.251064
