Supreme Court case about contract interpretation

Contract interpretation is an area of law that is a bit difficult to predict, once it goes in litigation stage. The recent Supreme Court decision of Arnold v Britton & Ors [2015] UKSC 36 has made our lives at the office even more difficult.

The general rule before this case was that the contract should be interpreted in a way that makes commercial sense. The Supreme Court has gone back to the general principle of literal interpretation (the natural meaning of the words): if the clause is clear, it stands as it is, even if does not make any commercial sense.

You can see a case analysis from the ICAEW website –