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Wednesday, March 1, 2006

Literal Meaning Doesn't Control if Result Would Be "Uncommercial"

United_kingdom_flag_6 A recent British case has an interesting contract interpretation issue, decided by the court on the ground that a contrary interpretation would be “odd and uncommercial.”

The case, John Roberts Architects Ltd. v. Parkcare Homes (No.2) Ltd., involves an adjudication clause which read:

The Adjudicator may in his discretion direct the payment of legal costs and expenses of one party by another as part of his decision.

The adjudicator, apparently, did not render a decision on the merits because of jurisdictional problem, but nevertheless ordered substantial legal fees, around  £87,000.  The party hit with the fees objected, claiming that the clause permitted legal fees only as part of a decision on the merits of the claim.  The Court of Appeal agreed that this was the literal meaning of the clause, but that it was unreasonable to read it that way.

Attorney Ben Worthington of London’s CMS Cameron McKenna LLP offers a snapshot of the facts and the court’s reasoning.

[Frank Snyder]

http://lawprofessors.typepad.com/contractsprof_blog/2006/03/literal_meaning.html

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