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- Title
CONSTRUCTION OF CONTRACTS: THE AMBIGUITY GATEWAY AND THE CURRENT STATE OF THE LAW.
- Authors
CHAAR, MAHA
- Abstract
Over time there has been some judicial confusion as to when objective surrounding circumstances may be taken into account to assist in the construction of terms. The nature of the objective approach has meant that on occasion, courts have shown a reluctance to look outside the four corners of the contract unless it is absolutely necessary to do so due to a textual ambiguity. The question is whether this reluctance is actually a necessary precondition to examining surrounding circumstances. The paper addresses the question of whether - or more accurately, 'to what extent' - evidence of surrounding circumstances is admissible as an aid to the construction or interpretation of contracts. The paper commences with an analysis of the true rule enunciated by Mason J in Codelfa Construction v State Rail Authority (1982) 149 CLR 337. The paper then demonstrates that by 2011, a series of construction contract appeal decisions had been handed down by the High Court that had not mentioned any need to satisfy the 'true rule'. The paper provides an analysis of how over time, most intermediate Australian appellate courts had assumed that it was no longer necessary to demonstrate ambiguity so as to provide a basis to admit evidence of surrounding circumstances at trial in order to assist the interpretation of the contract. Case such as Franklins Pty Ltd v Metcash Trading Ltd (2009) 76 NSWLR 603 and MBF Investments Pty Ltd v Nolan [2011] VSCA 114 will be examined to show that although the matter appeared settled, the divergence of Australian judgments ignited the debate once again and disagreement boiled over. Recent case law and the High Court's response is examined to show that although the High Court has retained the ambiguity gateway, its breadth is wide. The paper also argues for a further widening of the ambiguity gateway so as not to present an operative barrier to consideration of extrinsic material.
- Subjects
AUSTRALIA; INTERPRETATION &; construction of contracts; COMMERCIAL law
- Publication
University of Western Australia Law Review, 2018, Vol 44, Issue 1, p65
- ISSN
0042-0328
- Publication type
Article