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Comparative Contract LawBritish and American Perspectives$
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Larry DiMatteo and Martin Hogg

Print publication date: 2015

Print ISBN-13: 9780198728733

Published to Oxford Scholarship Online: January 2016

DOI: 10.1093/acprof:oso/9780198728733.001.0001

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Can Judges Use Business Common Sense in Interpreting Contracts?

Can Judges Use Business Common Sense in Interpreting Contracts?

(p.272) 14 Can Judges Use Business Common Sense in Interpreting Contracts?
Comparative Contract Law

Lord Hodge

Oxford University Press

This chapter poses the question: can judges use business common sense in interpreting contracts? It reviews the use of contextual interpretation in the US and then lays out important factors for courts to consider in the interpretive process (and to determine whether the use of contextual evidence is appropriate)—formality of the contract in question; danger of an over-literal (formalistic) approach; how certain interpretations affect third parties; the long-term or relational nature of a given contract; and the benefits and pitfalls of a purposive approach to interpretation. It offers five interpretative propositions, before analysing the convergence and divergence of English and Scottish approaches to contractual interpretation.

Keywords:   contract law, interpretation, business common sense, context, relational contracts, purposive approach, formality, third parties

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