An Overview of the Interpretation of Contracts by English Courts and Its Impacts on the Corporate Sector of the Country

Abstract

Contracts, and thus the law governing it, is the pillar of all commercial and corporate transactions in any country. In fact, contracts, in such sectors, is an entire source of law in itself. In addition to statutes and common-law, contracts are the legally binding agreements that regulate the units of the corporate sector. Therefore, the manner in which courts interpret contracts in cases of a dispute has far-reaching consequences on corporate business conduct. The courts’ role in such domains has implications not only on matters of legal governance and regulation but also on the national economy, international trade, and international politics. It is, therefore, imperative to assess the role courts play in establishing standard norms and conventions of good practice and conduct in commercial and corporate settings by way of judgement regarding cases involving the corporate sector. This paper attempts to analyze this role of the English Courts by referring to certain prominent judgements such as Investors Compensation Scheme v. West Bromwich Housing Society, Hadley v Baxendale, and several others which proved instrumental in defining the practice of courts in determining intent and damages in contracts. It assesses how the English Courts have, through active involvement in the process of interpretation, affected the corporate landscape of the country. The paper largely discusses the evolution and effects of the general practice of courts in matters of determination of the matrix of fact, active investigation of intent, the place of good faith in English contracts, and the nature of damages to contracts.