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Interpretation of Contracts
Construction Law
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Dispute Resolution
| Procurement | Training
London
+44 (0)20 7022 2192
London@QuiggGolden.com
Dublin
+353 (0)1 676 6744
Dublin@QuiggGolden.com
Belfast+44 (0)28 9032 1022Belfast@QuiggGolden.com
Maidstone+44 (0)1622 541 700Maidstone@QuiggGolden.com
Quigg Golden
Slide2Here today
James GoldenBEng
LLB CEng FICE
FIEI FCIArb FCInstCES MRICS
Director Adjudicator SolicitorJames.Golden@QuiggGolden.com
Slide3Quigg Golden What we do
Construction Law
PWC, NEC, FIDIC
contract advice/draftingProcurement LawStrategy, bid support, training, challenges
Dispute Avoidance/ResolutionConciliation/MediationAdjudicationArbitrationProject Management
Slide4Agenda & Learning Objectives
Ambiguity in Contracts How the courts deal with it A selection of case law Unforeseen Ground Conditions Common law position Position under the standard forms of construction contracts
Misrepresentation
Slide5Ambiguity in Contracts “Rubin’s Vase is an image used in psychologybut now well known. It is an ambiguous form that can be seen either as a vase or two symmetrical
faces, but not both.” O’Donnell J, Law Society of Ireland v Motor Insurer’s Bureau (
MIBI) [2017] IESC
31
Slide6Ambiguity in Contracts
Ambiguous – having more than one meaning; open to different interpretations (Concise Oxford English Dictionary, (12th Edition, Oxford University Press 2011).What can the parties do to rectify an ambiguity in a contract?
Mutually agree to the meaning; orRefer it to the courts or a decision maker.
Slide7Principles of contract interpretation
Investors Compensation Scheme v West Bromwich Building Society [1998] 1 WLR 896 (Lord Hoffman) set the general principles:Consider the meaning a document would convey to a reasonable person having all the background knowledge reasonably available to the parties at the time.
The background knowledge – all relevant factual information which would have affected the way in which the language of the document would have been understood by a reasonable person.
Pre-contract negotiations excluded. Ascertain what the words were intended to convey as opposed to their literal meaning.May conclude that something has gone wrong with that language and the court must attempt to give effect to what the parties meant to say.
Slide8Law Society of Ireland v Motor Insurer’s Bureau (MIBI) [2017] IESC
31Approved the Investors Compensation Scheme principlesAdopted a holistic approach
Judgment of O’Donnell J: “It is necessary to understand the entirety of an agreement and then to consider what that means for the specific issue now raised. It is necessary therefore to see the agreement and the background context, as the parties saw them at the time the agreement was made, rather than to approach it through the lens of the dispute which has arisen sometimes much later.”
Slide9MT Højgaard v
E.ON
Slide10Avoiding Ambiguity in ContractsPut all
of the contractual terms in writingDefine contractual terms i.e. Completion Include all documents that form part of the contract Review amended or bespoke contractsHave an effective hierarchy clause
Slide11Ground Conditions
Slide12Ground ConditionsThe problem is what lies beneath…
Slide13Common Law Position In the absence of an express contractual provision reliance on common law position
Bottoms v York Corporation (1892) HBC (4th ed), Vol 2York had made no express guarantee or representation with regard to the ground conditionsContractor bears the risk sub-soil
Slide14PWC
Schedule Part 1K:K5 – Factual error in the Works Requirements K19 – Unforeseeable ground conditions
10.3 – Condition Precedent
Slide15NEC4
Cl 60.1.12 – physical conditions – experienced contractor would have judged at the Contract Date.Cl 60.2 – What the Contractor is assumed to have taken into account.
Cl 60.3 – Ambiguity or inconsistency.
Slide16FIDIC
Red and Yellow Book - Cl 4.12, Employer bears risk of physical conditions which could not have been reasonably foreseen by an experienced Contractor at the date of tender. Employer must provide all data.Silver Book Cl 4.11 and 4.12 - Contractor is responsible
Slide17IEI (4th edition)
Cl 12(1) – reasonable foreseeability by an experienced contractor.
Slide18Misrepresentation
An untrue statement made by one party to another to induce it into the contract Types of misrepresentation:Fraudulent Misrepresentation Negligent MisrepresentationWholly Innocent Misrepresentation
Slide19Fraudulent Misrepresentation Leading case Derry v Peek (1889)
“…fraud is proved when it is shown that a false representation has been made (1) knowingly, (2) without belief in its truth, or (3) recklessly, careless whether it is true or false.”Relief – contract void and can sue for damages in Tort
Slide20Pearson v Dublin Corporation [1907] A.C. 351, HL
A clause providing that the contractors must not rely on any representation would not protect employers for the reckless fraudulent misrepresentation of the employers’ engineer.
Slide21Negligent MisrepresentationSection 45(1) of the Sale of Goods and supply of Services Act 1980
“Where a person has entered into a contract after a misrepresentation…and as a result thereof he has suffered loss, then, if the person making the misrepresentation would be liable to damages in respect thereof had the misrepresentation been made fraudulently, that person shall be so liable notwithstanding that the misrepresentation was not made fraudulently, unless he proves that he had reasonable ground to believe and did believe up to the time the contract was made that the facts represented were true”
Slide22Wholly Innocent MisrepresentationSection 45(2) of the Sale of Goods and supply of Services Act 1980
“Where a person has entered into a contract after a misrepresentation has been made to him otherwise than fraudulently, and he would be entitled…to rescind the contract…the court may declare the contract subsisting and award damages in lieu of rescission, if of opinion that it would be equitable to do so”
Slide23Conclusion Parties decide who bears the risk
If silent = common law position Contractors beware Be clear about representations and their status
Slide24Questions
Slide25London
+44 (0)20 7022 2192
London@QuiggGolden.com
Dublin
+353 (0)1 676 6744
Dublin@QuiggGolden.com
Belfast
+44 (0)28 9032 1022
Belfast@QuiggGolden.com
Maidstone
+44 (0)1622 541 700
Maidstone@QuiggGolden.com
Quigg Golden
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