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 third parties save and to the extent that the Buyer has failed to take delivery of gas nominated by the Buyer in accordance with the contractual terms. I do not consider that surrounding circumstances, such as the fact that the Sellers may have to limit oil production in order to comply with the choice which they have given to the Buyer as to the rate of delivery of gas, is sufficient to rebut that conclusion.’ The construction of a contract by reference to the factual background is to be limited to facts which both parties knew each would have in mind when entering into the contract.


Staughton LJ, Otton LJ, Robert Walker LJ


Gazette 10-Dec-1997, Times 02-Dec-1997, [1997] EWCA Civ 2752




England and Wales


CitedCharrington and Co Ltd v Wooler HL 1914
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 . .
CitedInvestors Compensation Scheme Ltd v West Bromwich Building Society HL 19-Jun-1997
Account taken of circumstances wihout ambiguity
The respondent gave advice on home income plans. The individual claimants had assigned their initial claims to the scheme, but later sought also to have their mortgages in favour of the respondent set aside.
Held: Investors having once . .
CitedYouell and Others v Bland Welch and Co Ltd and Others CA 1992
The court considered whether an underwiter’s slip was admissible when construing the policy which followed.
Held: Staughton LJ said: ‘It is now, in my view, somewhat old-fashioned to approach such a problem armed with the parol evidence rule, . .
CitedNew Hampshire Insurance Co and Others v MGN Ltd and Others (No 1) CA 15-Jun-1995
A court should not hear evidence of a common undisclosed intent to construe a written contract. . .
CitedNational Bank of Sharjah v Dellborg and Others CA 9-Jul-1997
The parties disputed the meaning of a Tomlin order to which they had agreed.
Held: Saville LJ said ‘if the circumstances surrounding the making of the agreement showed to a reasonable man that to read paragraph 8 as covering only the amounts . .
Lists of cited by and citing cases may be incomplete.


Updated: 10 November 2022; Ref: scu.89068