Chapter 12 Self-test questions

. Which of the following is a judge entitled to do when interpreting a contract?

To improve the bargain agreed by the parties.

To bring about an agreement for the parties.

To give effect to the contract reached.

All of the above are correct.

. How will the court normally interpret a contract?

According to an objective assessment of the parties' intentions.

According to a subjective assessment of the parties' intentions.

According to a subjective assessment of the claimant's intentions.

According to an objective assessment of the defendant's intentions.

. How did the courts traditionally interpret contracts?

Always by reference to the plain words of the contract.

Always by reference to external considerations.

Always by reference both to the plain words of the contract and to external considerations.

Normally by reference to the plain words of the contract, sometimes supplemented by external considerations.

. In the case In the Goods of Peel, the testator appointed as his executor 'Francis Courtnay Thorpe, of Hampton … Middlesex'. There were in fact two people called Francis Thorpe who lived in Hampton, Middlesex. Who did the court interpret the will to nominate as executor?

Francis Courtnay Thorpe, a 12-year-old boy.

Francis Corbet Thorpe, the boy's father and a friend of the testator

The court held that both people were executors.

The court held that since Francis Courtnay Thorpe, a 12-year-old boy, was underage, there was no executor.

. What is the best term to describe the approach taken to interpretation by the House of Lords in Investors Compensation Scheme Ltd v West Bromwich Building Society?

Literal.

Contextual.

Obvious.

Subjective.

. Under Lord Hoffmann's approach to interpretation, which of the following may be taken into account when interpreting contracts?

The parties' previous negotiations.

Declarations of the parties' background intent.

Background knowledge which may affect the reasonable understanding of the document.

All of the above options are correct.

. Why did Lord Lloyd dissent on the approach taken to interpretation in Investors Compensation Scheme Ltd v West Bromwich Building Society?

He believes that the approach of the majority relies too much on the literal meaning of words.

He believes that the approach of the majority is well-supported by authority.

He believes that the approach of the majority strays too far from the ordinary meaning of the words.

He does not believe that background knowledge has any role in contractual interpretation.

. How did the focus of Lord Neuberger in Arnold v Britton differ from that of Lord Hoffmann in ICS v West Bromwich Building Society, in relation to contractual interpretation?

Lord Neuberger emphasised the words used by the parties, whereas Lord Hoffmann gave more weight to the background facts.

Lord Neuberger emphasised the background facts more than Lord Hoffmann, who emphasised primarily the words used the parties.

Lord Neuberger took a completely literal approach to the wording of the contract; Lord Hoffmann had taken a completely purposive approach.

Lord Neuberger took a completely purposive approach to the wording of the contract; Lord Hoffmann had taken a completely literal approach.

. How did Lord Hodge in Wood v Capita Insurance Services resolve the seemingly opposed approaches to interpretation of Lord Neuberger (Arnold) and Lord Nicholls (ICS)?

Lord Hodge adopted the Arnold v Britton textual approach.

Lord Hodge adopted the ICS contextual approach.

Lord Hodge suggested that both methods could be applied at different times.

Lord Hodge disavowed both approaches.

. What does Lord Sumption think has been the effect of Wood v Capital Insurance Services?

The Supreme Court has begun to take a more expansive approach to contractual interpretation.

The Supreme Court has begun to take a more restrictive approach to contractual interpretation.

The Supreme Court has adopted a new standard of contractual interpretation, distinct from Arnold v Britton and ICS.

Lord Sumption does not believe that Wood v Capital Insurance Services is significant.

. Have interpretation and implication been merged into a single doctrine?

Yes, as a result of Attorney General of Belize v Belize Telecom.

Yes, they have always been part of a merged doctrine.

Not formally, but the two doctrines may be used interchangeably.

No.

. Why might it be a bad thing if the divide between interpretation and rectification is blurred?

Commercial certainty might be undermined if the doctrines are blurred.

The two doctrines can lead to the contract being enforced in a different way to the literal writing.

Rectification might make it easier to identify the meaning of a contract.

There is no downside to a merging of the doctrines.

. Which of the following reasons was identified in Chartbrook Ltd v Persimmon Homes Ltd to justify excluding pre-contractual negotiations from the 'factual matrix'?

Any statements presented would be too subjective.

Allowing pre-contractual negotiations to be considered might encourage dishonest conduct.

It would involve too much of the court's time being used up.

All of the above options are correct.

. Why are the courts often reluctant to refer to 'commercial common sense' in contractual interpretation?

It risks undermining the language used by the parties.

Judges are not often commercially minded.

It might unreasonably force the parties to abide by the word of their obligations.

All of the above options are correct.

. Why did the majority of the Court of Appeal in Cherry Tree Ltd v Landmain Ltd take a narrow approach to determining what may enter the 'factual matrix' in three-party cases?

A more textual approach better protects third parties.

A more contextual approach better protects third parties.

It is important that third parties are not able to enforce contracts to which they are not parties.

None of the above options is correct.

. Which doctrine is best left to correct contractual mistakes?

Interpretation.

Implication.

Rectification.

All of the above options are correct.

. What does Calnan argue should be the approach to interpretation?

A wholly textual approach should be adopted.

A wholly contextual approach should be adopted.

A mixed approach should be taken, with a lot of possible information contributing to the 'matrix of fact'.

A mixed approach should be taken, with only limited information contributing to the 'matrix of fact'.

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