A Disagreement with Lord Hoffmann's Rules in Contract's Interpretation
I. Introduction It appears that there is a difference between two principles in common law when it comes to contracts interpretation. Since 1982, The Australian High courts have endorsed the Codelfa approach, from Codelfa Construction Pty Ltd v State Rail Authority of N.S.W . , in interpreting commercial contracts. [1] The notion of Codelfa approach requires judges to adopt the natural and ‘plain meaning’ of contract words – not to construe the meaning of the words of an agreement, that is, unless there is an ambiguity. [2] In such cases where an obscurity in wording does occur, then the ‘evidence of surrounding circumstances is admissible to assist in the interpretation of the contract.’ [3] Thus, the judge will consider the background facts just when there is a lack of plain meaning in the terms of an agreement. In 1998, however, a new approach to contract interpretation was introduced, developed by Lord Hoffmann in the case of Investors Comp Schem