Recitals and interpretation of contracts

December 12th, 2017 by James Goudie KC

In Attorney General v River Dorée Holdings Ltd, concerned with a Lease, the Privy Council stated as follows, (2017) UKPC 39.

A recital may in appropriate circumstances serve as background or an introduction informing or assisting the interpretation of a substantive provision in the contract. But the two must at least be capable of being read consistently. No ambiguity can be created from a mere recital which cannot consistently be read together with the substantive and operative parts of the contract concerned. (Paragraph 48).

It is not for any Court to remake the contract of the parties under the guise of interpretation. (Paragraph 51).

Negotiations are not admissible for the purpose of interpretation. (Ibid).

It is significant if there is no claim for rectification, as there might be if there is good evidence available that an interpretation contended for had in fact been the prior agreement of the parties during negotiations and that such agreement had been in existence down to the execution of the contract. (Paragraph 55).

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