The Limits of Interpretation in the Law of Contract
(2016) 47 Victoria University of Wellington Law Review 191-207
16 Pages Posted: 15 Dec 2016 Last revised: 5 Jan 2017
Date Written: December 15, 2016
In the law of contract questions of risk allocation properly turn, where possible, on interpretation of the agreement. This essay will explore the limits of that approach. It will do so by considering two doctrines that lie at the boundaries of contract interpretation: the implication of terms in fact and the remoteness principle. Both doctrines have been commonly understood as exercises in gap filling, but in two influential judgments Lord Hoffmann sought to recast them as interpretative principles (Attorney General of Belize v Belize Telecom Ltd  1 WLR 1988 and Transfield Shipping Inc v Mercator Shipping Inc (‘The Achilleas’)  1 AC 61). It will be argued that the implication of terms in fact can properly be regarded as an exercise in interpretation, but the same cannot be said of the remoteness doctrine. In their embrace of an interpretative approach to remoteness and rejection of an interpretative approach to implication, the English courts have backed the wrong horse.
Keywords: Contract, Interpretation, Implication of Terms, Implied Terms, Remoteness
JEL Classification: K12
Suggested Citation: Suggested Citation