Chapter 12 Self-test questions

1. In a contract between A and B, it is stated that payment must be made 'at the end of the financial year'. How would a court interpret the term?

Find the meaning against the relevant background to discover what the parties intended 'at the end of the financial year' to mean, excluding options where the parties have given a meaning to 'financial year' that departs from any normal usage.

Look to a dictionary for the meaning of 'financial year'.

Find the meaning against the relevant background to discover what the parties intended 'at the end of the financial year' to mean, even if this means attributing a meaning to the words that a third party would not understand the words to mean without further background to the contract.

None of the options given is correct.

2. Which of the following is the best description of recent developments in the case law?

There has been no move away from Lord Hoffmann's principles in ICS.

Lord Hoffmann's principles in ICS are now bad law.

There is an increasing emphasis on interpreting the language used by the parties.

None of the options given is correct.

3. What limit is there to the process of interpretation that does not exist where the claim is for rectification?

The court cannot do violence to language by making it yield more business common sense.

Evidence of prior negotiations is not admissible.

The court cannot conclude that the parties used the wrong words.

All of the options given are correct.

4. X and Y contract for the sale of X's flat. The contract states that no pets are allowed in the building. X believes, and tells Y, that this simply means pets are only not allowed if they are not kept in cages. Y brings his pet snake (kept in a cage) when he moves into the property. X claims that this is a breach of contract. Does Y have a defence?

Yes, post-contractual conduct altered the interpretation of the contract.

Yes, X can be estopped from claiming breach.

No, post-contractual conduct is excluded from the factual matrix.

No, although there is instead a claim for misrepresentation.

5. Consistent with the decision in Cherry Tree, which of the following documents would most likely receive a more restrictive interpretation by the court?

A contract of sale of a car between A and B

An injunction

A merger between two local businesses

A covenant not to sue X for breach of an agreement

6. How might a third party prevent himself from being prejudiced by an interpretation of a contract based upon a wide factual matrix that is not clear from the face of the document?

Inquire as to the relevant background

Argue that the contract is registrable or a public document

Estoppel

All of the options given are correct

Chapter 12 Self-test questions

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