Damages awarded to a Lloyd’s ‘name’ compensating for negligent underwriting must be paid into the trust fund set up for this purpose on behalf of member names, even though the claim fell outside the strict ambit of the original fund because of valid amendment.
Lord Steyn said: ‘Loyalty to the text of a commercial contract, instrument, or document read in its contextual setting is the paramount principle of interpretation. But in the process of interpreting the meaning of the language of a commercial document the court ought generally to favour a commercially sensible construction. The reason for this approach is that a commercial construction is likely to give effect to the intention of the parties. Words ought therefore to be interpreted in the way in which a reasonable commercial person would construe them. And the reasonable commercial person can safely be assumed to be unimpressed with technical interpretations and undue emphasis on niceties of language’.
Judges:
Lord Hutton, Lord Browne-Wilkinson, Lord Steyn, Lord Hope of Craighead, Lord Woolf MR
Citations:
Times 29-Mar-1999, Gazette 03-Jun-1999, [1999] 1 WLR 756, [1999] UKHL 22
Links:
House of Lords, House of Lords, Bailii
Jurisdiction:
England and Wales
Cited by:
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 . .
Lists of cited by and citing cases may be incomplete.
Insurance
Updated: 31 May 2022; Ref: scu.159005