Obligations in Commercial Contracts: A Matter of Law or Interpretation?

Abstract

English commercial contract law is undergoing its own 'interpretative turn'. According to Lord Hoffmann, disputes concerning implied terms in contracts and the extent of the defendant's liability for loss on breach are resolved by searching for the meaning of the parties' agreement. The process is one of contextual interpretation of the contract (understood in a broad sense which regards the contractual agreement as incorporating more than just the text), rather than the external application of autonomous legal rules derived from authoritative precedents. On the one hand this agreement-centred approach can be regarded as the natural consequence of a definitive principle of contractual liability-obligations are assumed by the parties, rather than imposed on them. On this basis, Lord Hoffmann is simply reasserting the facilitative character of commercial contract law. On the other hand this approach raises questions about the scope and limits of the legal regulation of commercial activity by courts. At its most extreme, the interpretative approach espoused by Lord Hoffmann admits of only an attenuated commitment to commercial contract law as a repository of non-instrumental normative values. Instead, commercial contract law is perceived only as a loose grouping of pragmatic considerations, given a superficial veneer of coherence by reference to a substantively empty concept of interpretation. The article traces the development of this interpretative turn and assesses some of its positive and negative implications, both for the operation of other rules of contract law and for our general understanding of the role of the law in regulating commercial activity.

Belize It or Not: Implied Contract Terms in Marks and Spencer v BNP Paribas

“…91 Mitchell has identified Belize as part of a trend in which emphasis shifted from free-standing rules of contract law to a greater focus on the interpretation and application of the contract itself. 92 It is possible that its rejection in Marks and Spencer marks the beginning of the end of contract law's 'interpretative turn'. Admittedly, implication of terms was always an outlier in this trend, given that the traditional rules also stress fidelity to the parties' intentions.…”

IMPLIED TERMS AFTERBELIZE TELECOM

“…188 There is the danger, identified by Catherine Mitchell, that Lord Hoffmann's agreement-centred and interpretative approach might be no more than "a smokescreen that suggests party autonomy but sanctions judicial activism in the commercial sphere by allowing reasonable outcomes to be imposed on the parties". 189 These concerns seem misplaced. Lord Hoffmann went out of his way in Belize to make clear that a court "has no power to improve upon" the contract, nor to "introduce terms to make it fairer or more reasonable".…”