2022-03-16（183）Engineering law and the ICE Contracts

(e) DEFECTS. An apparently good contract may be affected by certain defects—for example, illegality (p. 110), mistake or misrepresentation (pp. 12, 60) or economic duress (p. 182), and a contract which was valid originally may become frustrated (p. 281) or be brought to an end when it is broken (p. 425).

Interpretation of the Contract forms by the courts—drafting. The courts interpret and apply a written contract literally—when there is a dispute they assume that the written words were chosen by the parties with the possibility of that dispute in mind and that they accurately set out their intention when they made the contract as to the solution of the dispute. That is the rule even where the circumstances of the dispute in fact could not have been anticipated when the contract was made. The reasonable solution in view of what has actually happened or the real intention of the parties when they made the contract will not usually be given effect to if not expressed by the written words:

Partners in a firm, by a deed which set out that the firm could not pay its creditors, assigned the firm’s business and property absolutely to trustees. The deed directed the trustees to sell the business and property and to divide the proceeds amongst the firm’s creditors rateably in proportions according to the amount of their debts. On sale there was found to be enough to satisfy the debts due to the creditors and to leave a surplus.

Held: The partners had assigned outright their whole interest in the business and the property, and not merely enough to pay their debts, and the creditors were entitled to the surplus. r

The rules are not always applied as strictly as that (see p. 43 (e)) and there are also cases where the written contract may be superseded (p. 58, N. 3). But by and large the courts do not give the draftsmen enough help, and make little allowance for the real difficulties when a contract is being made of anticipating all possibilities, and wording the contract so as to cover them precisely.

The very detailed terms of the I.C.E. Contract forms, which might be thought over-elaborate, are necessary to see that they stand up to this type of interpretation and to the dissection which they may have to face in court. And the attitude of the courts does fulfill some useful purpose in so far as it causes contracting parties and their advisers to consider and record what, and the exact implications of what, they are agreeing to. It is failing to do this which causes the most trouble, not the rules of interpretation.

For the detailed rules of interpretation see p. 41, N. 1, and p. 446 on the adverse effects of the attitude of the courts.