Part 1: Nick Knapman explains the art of correcting mistakes by construction
While the basic principles on which a contract should be interpreted are well known, any House of Lords’ decision which provides clear guidance on the application and refinement of these principles in particular circumstances is very welcome.
The decision in Chartbrook Limited v Persimmon Homes Limited and Others [2009] All ER (D) 12 (Jul) is one such decision. In the leading judgment, Lord Hoffmann commented at length on three issues in particular: (i) correction of mistakes by construction;
(ii) the extent of the exclusionary rule pursuant to which pre-contractual negotiations are inadmissible for the purposes of contract interpretation; and
(iii) rectification.
This article focuses on the construction issue while Lord Hoffmann’s comments on the arguments of “very considerable general importance” relating to the exclusionary rule and rectification will be covered in part two.
The facts
Chartbrook (landowner) and Persimmon Homes (developer) entered into a development agreement on 16 October 2001 to construct a mixed use scheme in Wandsworth.
Under the terms of the agreement, Persimmon was
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