Content area
Full Text
(ProQuest: ... denotes non-US-ASCII text omitted.)
Once the fundamental change that has come over the law on construction of contracts since the observations of Lord Wilberforce in Prenn v. Simmonds 1 and Reardon Smith v. Yngvar Hansen-Tangen 2 had been sufficiently appreciated,3 "construction" and rectification, the two weapons available to the courts to deal with written agreements that do not reflect the contract that the parties intended to make, have lived in uneasy parallel with each other. Although the two institutions serve the same forensic purpose they purport to perform quite different tasks, the most striking difference between them being that evidence of prior negotiations is inadmissible when the disappointed party seeks to construe the defective document in terms different from those stated on its face; but such evidence is admissible, indeed has been seen as the most relevant evidence of all,4 when the disappointed party, not having succeeded in having the document construed to his liking, seeks instead to have the document rectified by the court.
The strict rule of inadmissibility of evidence of prior negotiations when construing a written contract produces a practical paradox, because when the contractual writing is disputed all but the most negligent of counsel will have pleaded rectification of the writing as well as the construction of the writing that best suits his clients' interests; and therefore the evidence forbidden in the exercise of construction will be before the court in any event. The court, in construing a document in any particular case, can be expected to note that evidence but then put it out of its mind.5 But the concurrent existence of a set of inconsistent rules calls for reflection on two separate branches of contractual jurisprudence that however coexist in most cases. That can be best done in the context of the most recent and authoritative survey of both construction and rectification, by the House of Lords in Chartbrook. Before that, however, something more must be said about the underlying law of construction and of rectification.
Construction: the Hoffmann principles
Rarely has what was presented as merely a statement of orthodox doctrine6 so completely captured an area of the law as have Lord Hoffmann's five principles set out in ICS.7