The parties disputed the construction of a contract for land intended for a business park development. It provided for an uplift to be later payable in certain circumstances, and the uplift was now claimed. The question was as to whether the uplift was to be based on the gross sale proceeds.
Held: The appeal failed. Lord Hope said: ‘The context shows that the intention of the parties must be taken to have been that the base figure for the calculation of the uplift was to be the open market value of the subjects at the date of the event that triggered the obligation. In other words, it can be assumed that this is what the parties would have said if they had been asked about it at the time when the missives were entered into. The fact that this makes good commercial sense is simply a makeweight. The words of the contract itself tell us that this must be taken to have been what they had in mind when they entered into it. ‘
Lord Hope, Deputy President, Lady Hale, Lord Mance, Lord Kerr, Lord Clarke
UKSC 2010/0229, [2011] UKSC 56
Bailii Summary, SC Summary, SC, Bailii
Scotland
Citing:
See Also – Aberdeen City Council v Stewart Milne Group Ltd SCS 3-Jun-2009
. .
Appeal from – Aberdeen City Council v Stewart Milne Group Ltd SCS 14-Oct-2010
. .
Cited – Rainy Sky Sa and Others v Kookmin Bank SC 2-Nov-2011
Commercial Sense Used to Interpret Contract
The Court was asked as to the role of commercial good sense in the construction of a term in a contract which was open to alternative interpretations.
Held: The appeal succeeded. In such a case the court should adopt the more, rather than the . .
Cited by:
Cited – Arnold v Britton and Others SC 10-Jun-2015
Absurdity did not defeat a clear clause
A standard lease of plots on a caravan park, contained a provision which appeared to increase the rent by 10% in each year. The tenants argued that such a substantial increase could not have been intended.
Held: The tenants’ appeal failed . .
Lists of cited by and citing cases may be incomplete.
Contract
Updated: 02 November 2021; Ref: scu.449770