 We keep on requesting Mr. Raja to share his insights. Well connected with law, know that interpretation of contracts is one of the different concepts. And how the word is construed or what could change the meaning. As I say, even in the interpretations, how does it differ from a colon to a comma and a full stop? These all words, they say that it has to be explained in the right perspective. Even the word may and shall can have different issues. Since we are already slightly great from the session, I would straight away ask Mr. Raja, a senior advocate from Madras Bar Association, to take things and explain in a subtle manner the way he always explains. Thank you. The outset, let me apologize for this delay in starting this presentation. Mr. Vikas is a bundle of energy and he has been for a long time, he has been asking me to give one more lecture on a topic of law which would be useful to practitioners of law. And I thought, see this is the 150th year of enactment of the Indian Contract Act. So actually we must be, I don't know whether the proper word is celebrating or discussing or deliberating or contemplating the advancement and evolution of the law of contracts. It is nearly 150 years from the time Sir James Stephen presented the Contract Act to the parliament and it was passed by the British parliament and became applicable to India. So this is a milestone in the development of the law and we need to take note of it and we need to see how we draw up a roadmap through which this act serves its purpose. The Indian Contract Act was framed in light of the provisions of the British law. And the British law itself, there was a lot of emphasis on the law relating to property, the manner in which property will be acquired, how it will be bargained for. These were the prime considerations which actually were behind the minds of the law makers when the Indian Contract Act was passed. Thereafter, there has been development of the law relating to contract but not really in the Indian Contract Act. This is because the law relating to contracts in India is just not contained in the Indian Contract Act alone. For example, you have the negotiable instrument side, you have the sale of goods side and then you have the partnership side and today with the explosion in technology and the fact that we are fast becoming a global village. There is a lot of emphasis on the development of law relating to contract. It is a moot question as to whether the law of contract has kept pace with these changes in the manner in which contracts are entered into. Today you have for example the click and wrap contracts. You have a whole lot of contracts that you enter into by just clicking a button which says I agree. What are the implications of this and has the law of contracts kept pace with this itself is an interesting subject. But that is not a subject that I am going to go into in detail today except to point to the fact that the 150th year of the enactment of the law of contract is I would say an ideal milestone in which we sit back, contemplate and look at the changes that we need to make with the law of contracts. Now what are the provisions of the law of contract that need a revisit so to say. It is interesting that the law commission in its 13th law commission report has gone into this issue and called the attention of the legislature and the government to certain changes that could be made to the law of contract. Principle among them are the doctrine of privity. The law commission in the 13th law commission report which was brought out in the 1958-1959 they say that this doctrine of privity has to be revisited because the contract act has no provision that deals with the privity of contract whereas much of the obligations between parties to a contract is determined on the question as to whether there is a consensus add item between two parties and whether there is a privity of contract between the two parties. So firstly there is a need to relook at the concepts relating to privity of contract. Then we need to look at secondly we need to look at codification of supplementary principles that have evolved through the development of the law relating to contract. This is also highlighted by the law commission in its 13th report and it says that the dependence on English law concepts to supply the shortcomings of an Indian statute does not add to the consistency nor to the simplicity of the law. These are exactly the words used by the law commission in this 13th law commission report and even though this call was given in 1958-1959 unfortunately we have not paid heed to this call and possibly the 150th year of the law of contracts is possibly the ideal time when we bestow some attention on it. The third is the doctrine of consideration and once again the law commission says that this doctrine of consideration in its statutory form has to be revisited and it points out that it is advisable to bring in these changes by rewriting section 25 of the Indian contract tag and listing extraordinary situation where a contract is valid without consideration. For example, let us look at a situation where a person promises a charitable trust that he will give X amount of money and the charitable trust on the basis of that for putting up a construction to house a hospital and the charitable institution on the basis of that starts construction and completes a construction with the hope that this money is going to come and ultimately this money doesn't come the institution has no way of recovering it because the principle and the contract likes consideration will stand at the face of the institution. So therefore there is a need to revisit concepts relating to consideration in the law of contract and the law commission points to this inadequacy and then today we need to also recognize non-compete restrictions so non-compete restrictions have to be redrafted to be in tune with the modern developing world. Foreign businesses in India tend to also include confidentiality, non-competitiveness non-solicitation clauses in their clauses with senior management and employees as is normally done in some foreign countries. There are certain aspects of contracts which are today acquiring a global dimension and we need to pay heed to that if we are going to be a favorable destination for business enterprises to set up shop here and at least in terms of that we need to have certain concepts that we borrow from abroad and apply them in India because if these are not going to be applied in India there is going to be a problem that we may have foreign firms may have some hesitancy in setting up shop here. Also in line with the development in the modern world we need to also make specific provisions for e-contracts e-contracts once again we need to have provisions in that clarifying the rules on creation of e-contract and the act must also provide for questions relating to jurisdiction of e-contracts the right and obligation of parties and cases of one party's unilateral eras these are again a part of the concept of development in business that is happening all over the world and the manner in which business for example in 1872 when the Indian contract act was drafted nobody would have conceived that one person sitting in India could finalize a contract with a person sitting in some other part of the globe just by exchange of e-mails so to these contracts what is the law that applies if the law that applies is specified with the contract there might not be much of a problem but unfortunately what happens is the same contract is accepted by people in different parts of the globe at different points of time in respect to the same product or in respect to the same service so it becomes next to impossible for the person either supplying the product or service or the person availing the product or service to adequately provide for jurisdiction this is a problem not only with contracts but also in the law relating to arbitration and we know that the Supreme Court has now had to come up with its own interpretation for example with regard to concepts of venue and seat in arbitration and today the Supreme Court has recognized that there is a distinction between the seat and the venue of arbitration and while the venue of arbitration can keep shifting during the course of a contract the seat always remains the same now these have evolved on account of judicial interpretation and not so much of regard to the development or any amendment to the law and therefore we need to take note of all this and bring out appropriate changes the sixth important concept that requires and cries for attention is to regulate the nuances of issues relating to unfair terms of a contract because unfair terms of a contract is a concept that is being recognized in contract law in many parts of the world in fact in England they have a separate act itself that applies to it in India recently with the enactment of the Consumer Protection Act with its amendments in 2019 there is a provision there for unfair terms of contract act but those would apply only to a contract which could be considered a consumer oriented contract or contract in which a consumer is a beneficiary so we need to look at what law we need to bring in because today there are large enterprises that enter into agreements with very small traders or very small service providers in such situations what happens is that these large enterprises have their own standard form contract and the little or the small or the small scale industry which is forced to enter into a contract with these players is not stuck with these classes and how must law deal with that is something that has to be properly incorporated into the law of contract though today we have certain judgments of the Supreme Court which sort of talk about this what needs to be done is we need to bring it within the statutory framework so these are some of the issues crying for attention we also need to completely codify the law relating to damages that is again an aspect calling for attention so there is much to be done in the area of amending the contract act so 150 years down the line the contract act is something that has not undergone very many changes even all the very well thought out recommendations of the law commission in the 13th law commission report have not translated into parliamentary enactments so much of the law relating to contracts today is regulated by judgments of the Supreme Court and the various cycles the law of contract we must understand has to be read with the provisions of several other acts for example the concept of estoppel is linked to the concept of performance of a contract but the concept of estoppel is in the law of evidence likewise there are concepts in the sale of goods act which are linked to the contract act most importantly there are concepts in the law of contract which are linked to the provisions of the specific relief act because the law of contract as Lord Denning observed is like mathematics it's completely bereft of morality it is clinical, it is sterile and it is applicable to all situations where people enter into a contract it has no equity, there is no equitable provision in contract but in its implementation and its application to human affairs since invariably the provisions of the specific relief act are invoked the result is that principles of equity do creep into the implementation of a contract between two parties so therefore when we read the contract act it is necessary for us to understand that the law of contract today has to be read with the provisions of several other acts for us to understand the complete meaning of those provisions and how they are to be applied so this is what we need to understand and we know that badly drafted contracts can give rise to a lot of trouble in fact one badly drafted contract was the basis of the famous play of Shakespeare The Merchant of Venice where he says if I default then you can have one pound of fresh from close to my heart so what was that, what did it mean and how Portia, the person who defends the hero this day says where the provisions of the act are very clear, it is one pound of flesh and she tells Shylock and if you take even on the own small then you will have to pay with your life for exceeding the terms of contract or breaching the terms of contract this is what Claude Menning when he said that the law of contract is like mathematics that there is no equity in the manner in which it has to be understood but since a contract captures the is supposed to regulate human affairs and the human affairs really don't are not very clinical and are not very precise and are not very easy to define over a period of time there have been certain principles that have been developed by Claude to help parties understand how they must regulate the affairs between them and that is what the study of interpretation of contracts is while interpretation of statutes is again a very interesting subject and has been the subject matter of a lot of commentary and a lot of thought, legal thought and a lot of deliberation unfortunately that much of attention has not been given to interpretation of contracts that's why even Mr. because requested me to talk on a subject I wanted to select a subject on which there has not been much deliberation and there has not been much discussion and please understand in the next possibly half an hour to 45 minutes I'm going to deal with a few concepts relating to interpretation of contracts but by please the caveat that I enter here is that these clauses are by no means exhaustive that these permissions and principles are by no means exhaustive and the purpose of my brief presentation would be to kindle your curiosity and make you run after books which will tell you more about the story of interpretation of contracts with this brief introduction I would request Vikas to start the slide presentation please come to the second slide come to the second slide because the second slide the second slide only how do we can do it so next interestingly before this interestingly the principle relating to interpretation is not found so much in a law book as in this famous book Alice in Wonderland written by Louis Carroll must a name mean something Alice asked some team only to get this answer when I use a word it means just what I choose it to mean neither more nor less this is the underlying principle which determines much of interpretation of contracts next next because next so we have to start for us to understand the concepts relating to contract we have to start with understanding what is the contract a contract is a document executed between two or more parties and is legally binding on all parties to the document a contract governs the relationship between the parties to the CD and defines the rights and responsibilities therefore the fundamental aspect that needs to be borne in mind while drafting a contract is to correctly incorporate the terms between the parties and not leave scope for any ambiguity now this is the most important guideline that any lawyer and advocate is called upon to draft a document and is you know an endeavor to create a binding document this is what he needs to bear in mind so why are rules of interpretations of contracts necessary now due to various reasons like time constraints undue pressure, vague language, insufficient skills in drafting contracts it is possible that a contract fails to correctly express the rights and responsibilities between the parties and the other important aspects relating to the contract it may as well happen that there are more than two interpretations of the clause in the agreement or contract the courts in case of such ambiguity follow the rules and principles of interpretation next so what is the meaning of the term interpretation interpretation means the process and principles which the courts apply to ascertain the meaning of a contract through the words in which it is expressed the aim of interpretation of a contract is to ascertain and discover the intention of the parties with which they had entered into the contract or agreement while interpreting it is considered important to give meaning to words as near to the intention of the parties to the contract and the law governing the same the important aspect about this is that in all this we talk about the the interpretation that follows from words it is not a mind reading exercise which a court goes into when it tries to interpret a contract and that's why it is necessary that words must be carefully used and words must convey the meaning which the parties want to convey while entering into this contract next what is the difference between statutory interpretation and interpretation of contracts statutory interpretation statutory obligations operate in revenue that is against the public at last and not particularly between definite parties interpretation of statutes is sorted through by quotes if there is any ambiguity in the language of the statute the interpretation of the sum name is done on the basis of legislative decisions the provisions of an enactment and other aids to statutory interpretation are used to understand this legislative intent but let's come to the second a contractual interpretation arises as a result of an agreement or contract between the parties and the rights and duties arising as a result of entering into such contract or agreement the need for interpretation arises either in case when the contract is being entered into or in case when the dispute arises the terms and conditions of the contract the same governs the right of only the parties who have entered into a contract next so when is this interpretation of contract applied it is wrong to think that this interpretation of contract is applied only when the dispute arises for a practicing advocate it is necessary to bear in mind that the interpretation of the contract will arise in three stages at the first stage at the stage of formation of a contract please best to attention on what meaning is going to be given to the words which are going to be used in a contract that should not become subject matter of controversy at a subsequent point of time therefore at the stage of formation of a contract you must interpret the terms correctly and there must be consensus item between the parties what the terms in the contract actually mean second is at the stage of performance when the contract is performed it is possible that one party may feel that something that had to be done under the terms of the contract was not being done now that is an interpretation at the stage of performance if that results in an understanding of both between both parties as to what the terms of that contract actually meant then there will be no problem on the other hand if there is going to be divergence and opinion between the parties as to what the terms of the contract meant then it will lead to a dispute and therefore comes the third stage which is that the terms interpretation of the contract must be also applied at the stage of settlement of disputes arising from the contract next what are the two standard approaches to interpretation of contract there are two classic approaches to interpretation of the contract there are many more but let us look at something which is very fundamental a subjective approach to contractual interpretation would answer the question of whether a particular fact situation falls within the scope of a particular contractual clause exclusively on the basis of what the parties actually or subjectively intended whereas an objective approach to contractual interpretation would answer the question exclusively with reference to external factors which can be a sometimes without taking into account the actual or subjective intention of the parties I will go into this a little more in detail as we go along next next and we go to the next slide there is something before that yes, next after this now what are some of the most fundamental principles of interpretation of contracts in the world of interpretation of contracts there are what are called Lord Hoffman's fundamental principles of interpretation of contracts Lord Hoffman laid down his five principles for interpretation of contracts in the celebrated case of investors compensation scheme limited versus West Bromite Building Society and these are the five principles the right meaning is what the document conveys to a reasonable person the next principle is this includes everything in the matrix of fact or relevant by grown circumstances third is prior negotiations are excluded from this worldwide that has been a bit of a controversy as to whether you can exclude prior negotiation but it is accepted as one of the principles on the basis of which documents will be interpreted there is some variations in some countries as to how exactly they will apply this principle but that we will see later the fourth is the meaning of words is not a literal meaning but the one reasonably understood from the context and the last is the meaning should not contradict the common sense view of what a contract required now these are the five fundamental principles but what is important to note is that you have recourse to these principles only if there is any ambiguity or there is a call to interpret the permissions of the contract there is going to be no ambiguity in both parties our influence is a sad item and a third party who is an adjudicator in the issue also thinks that that is how it should be interpreted then there is no problem at all but the moment there is a controversy as to what it means then these are the principles that are applicable now what are the other approaches that quotes commonly apply see what I told you are principles but when it comes to brass tags and when a quote is called on to apply a particular interpretation of contract principle there are certain the normal quotes practice that quotes are not and these are as follows now the contract must be construed as a whole first a very old rule which remains good law is that you look at the contract as a whole to understand its overall commercial purpose this is what Lord Hasbury mentioned in Glyn versus Margitse looking at the whole of the instrument and seeing what must regard as its main purpose one must reject words in the old provisions if they are inconsistent with what one assumes to be the main purpose of the contract for example if you are entering into a contract for maintenance of a house and today it's very common practice to do this click and cut and paste contract so something you will find somewhere you will cut and paste and put it in this contract and then you find when there is a dispute that many of the provisions don't apply to the maintenance of a house but may apply to a maintenance of a hospital so in the interpretation of the contract you must look at what is the purpose what is the end purpose which the contract seeks to achieve and your interpretation must be in line with that next a contract interpretation you must bear in mind is not an exact science the rules of contract interpretations have developed organically modern case law suggests that there is no strictly defined approach most principles of contract interpretation are broadly regarded as guidelines these guidelines are however closely considered should a tribunal or court be asked to provide its view as to how a contract should be interpreted next in recent years the general trend has seen a movement away from a overly literal approach to contract interpretation towards what has been known as the purpose of the approach this is a trend that is happening worldwide courts look at what is the purpose behind the contract and seek to interpret its terms in line with that purpose next so the third provision that the third approach which the court has is look closely at the words themselves the starting point for analysis is the use of the language of the contract in the case of Pink Floyd music limited versus the area by records limited reaffirmed that there exists a prima facie assumption that ordinary English words will meet what they say this means that the words of the contracts are clear and unambiguous that it should be assumed that the provision of the contract are those that the parties meant to include next next when interpreting a contract the ordinary meaning of word should be applied in the first instance when the facts of the case are applied to an interpretation of the ordinary meaning of the words of the contract and an unambiguous or straightforward research is achieved it is unlikely that further interpretation will be needed this is one very fundamental and standard approach of courts and if you are a successful lawyer you will be a lawyer who can tell the court that there is no need to go for statutory interpretation and that the words of the contract are clear next next an objective test I pointed out two approaches earlier a subjective approach and an objective approach what does that objective test mean that again has posed a bit of a problem worldwide to courts but this is how the courts have looked at it in cases of uncertainty it is rarely the case that words of the contract are clear and unambiguous when given even their ordinary meaning as a result the courts have needed to review how best to examine contract interpretation to provide clarity as to how contract interpretation beyond the ordinary meaning of word should be defined Lord Hoffman and investors compensation which I said is a very celebrated case and you must read this case fully to understand why it is so celebrated it's a joke a lot of principles relating to interpretation of contract yes next this is what he says Lord Hoffman was clear that the objective test meant more than just looking at the words of the contract in their ordinary meaning he said that the meaning of words is a matter of dictionaries and grammars that is not what a court is meant to do the meaning of the document is what the parties using those words against the relevant background would reasonably help be understood to be in short Lord Hoffman's test asked what would be what would a reasonable man interpret to be the meaning of the contract next the objectives test is wider than the words in the contract in the court of appeal case NLA group limited versus bothers the court confirmed Lord Hoffman's view that it is necessary to look at all the relevant background information where there is a confusing flaw or a mistake in the clause which needs resolving next it is true way however to say Lord Hoffman said all relevant background information that's all very fine but in its practical application it poses problems because it needs to be considered when seeking to interpret a contract for example you take a construction contract in a construction and engineering project for example this would include tender negotiation contemporaneous correspondence dating to the time the contract was agreed and even circumstances after the day the contract was formed such a scope is clearly too wide and examination of every piece of potentially relevant background information would be insufficient and costly the relevant context for the purposes of contract interpretation has therefore been further defined and what is that refinement and definition let's look at the next slide Lord Hoffman went to describe the relevant contextual information as all the background knowledge which would reasonably have been available to the parties in the situation in which they were at the time of the contract it includes anything which would have affected the way of the language of the document which would have been understood by the reasonable man next now that makes it slightly better but there still remains a wide context anything which would have influenced either parties intention when it entered into the contract may in fact be an important piece of evidence should a question of contract interpretation arise a communication which seems unimportant when a contract is formed may in fact prove to be crucial when seeking to analyze the intention of the contracting parties when the contract was signed document management or projects even at a pre-contract stage is therefore key next what happens this is a very important principle approach which the quote follows what happens after a contract is formed is irrelevant when interpreting a contract the key issue is what the parties understanding and intention ought to be at the time the contract was made the recent technology and construction for case in empty hybrid versus EO and climate and renewable UK Robert confirmed that this principle remains a key part of contract interpretation it is you can't sort of arrive at the meaning of a contract based on certain in events that happened after the contract was formed next the court held the actual circumstances applicable would involve post-contract contact not usually an invisible guide to interpretation often when a dispute occurs contracting parties can become preoccupied by events which post-date the agreement of the contract these events are seen as irrelevant to what the contract properly means by quotes and tribunals subsequent events may shed some light on the contract's interpretation but cannot change the fundamental meaning of the contract itself although it seems harsh this position is understandable if post-conduct events were taken into account the result may flow at a contract means one thing the day it is signed but by the reason of subsequent event means something different the day after this is a problem in contractual interpretation and therefore the courts have drawn this boundary that you cannot understand or interpret the terms of the contract on the basis of events that have happened subsequent to the contract being entered into and at the time when it has actually been implemented next the commercial purpose of contract is key beyond all this beyond everything that I have said the commercial purpose of the contract is key it is possible and sometimes appropriate to add a commercial common sense angle to the contract interpretation in fact the words of the contract would be post upon a party a responsibility which is clearly not in line with commercial reality that it may be sensible to depart from consideration of the ordinary and blame meaning of words Lord Bipplock in the House of Lords confirmed this in the case of Anatole Lars Kompathia and Averia's ACA was a salient regulatory AV and said that if detailed semantic and syntactic analysis of a word in a commercial contract is going to lead to a conclusion that floats business common sense it must be made to yield to business common sense so what is primary and supreme is the commercial business considerations and the objective of the contract as appreciated in conjunction with the words both must go hand in hand suppose there is a preeminent and extremely laudable commercial sense but unfortunately that does not it is not reflected in the words that are being used in the contract the court can do very little but when there is a problem of interpretation it is advisable to apply both to find out what exactly the contract was meant to achieve this will go only so far a contract cannot be rewritten this is what I was telling you cannot be rewritten just to reach a business like this however if there is more than one interpretation then the court of tribunal will likely give effect to what can be seen as a commercial purpose of the agreement next what are the circumstances when now we come to the most important part much of what I have told you till now can apply to the first and second stages also that is the stage at which you are actually drafting a contract and you are interpreting the terms you are trying to infuse clarity you are trying to avoid ambiguity you are trying to eliminate any sort of a confusion at that stage all the principles that I told you can be borne in mind they should also be borne in mind at the time the contract is implemented the contract is enforced and the contract is performed but then unfortunately if both parties cannot come to an understanding as to how the contract should actually work and what the meaning of the terms of the contract are then invariably the matter lands up before either a court I used a court in a very wide sense here it may be an arbitrator it may be any other authority and the courts are then called on to interpret the contract what are the principles they apply and when is the court called on to do this so our first situation when the court is called on to do this is ambiguity the very first and usually invariably the reason why the court is called on to interpret the contract ambiguity can only arise when after ascertaining the meaning of the words used by all the usual canons of construction the instrument still conveys a double or multiple meaning traditionally the law has classified ambiguity into two types patent ambiguity and latent ambiguity patent ambiguity which appears from the language of the instrument whereas latent ambiguity only becomes apparent when the language is applied to the factual situation at least contain the restrictive user cover-in damage the tenant cover-in that the premises should not be used for any other purpose than the trade or business of a printer nor have or permit any sale by auction without the letters less or certain concern which shall not be unreasonably withheld the landlord contended that its consent cannot be withheld to any change of views and that the provisions has to unreasonably withholding of consent related only to the holding of auctions it was held in the by the court that any ambiguity in the clause was to be resolved by applying the contra-preferendum principle this is still equals the second convent garden property company limited so this leads us to the next important principle that is used that is invariably upright and very often applied in a interpretation of contract which is the principle of contra-preferendum next what is this rule of contra-preferendum when there is a doubt about the meaning of a contract the words will be construed against the person who put them forward however the rule is reversed in the case of a grant by the crown but not in the case of a commercial contract which the crown is applied a merchant shipped a box of diamonds on a ship under a bill of trading containing an exemption box exempting the ship owner from pirates thieves and barratry of master and marines the diamonds were stolen during the voyage on the Sipsha Rival in Port the question arose whether the thieves had to be persons external to the ship or whether the word could include passengers Lush Jain said the word is ambiguous and being of doubtful meaning it must receive such a constriction as it most in favor of the ship owner and for whose benefit the exceptions are free if there is doubt about the meaning of a written term in a consumer contract the interpretation which is most favorable to the consumer so in respect of the principles applicable to contra-preferendum two things must be appreciated one is it is always construed against the person if there is a confusion you go against the person who drafted the contract now this is a very useful rule especially in consumer contract where a consumer is asked to be part of a contract which is drafted by another party and all that the consumer can do is to possibly click I agree if it is a e-contract or to sign a piece of paper which is given by the other party the most frequent application of this principle is an insurance contract where a party has given a document he has no time to read the document nor does he even read the document and these are what are called standard form contracts so in a standard form contract if there is to be any ambiguity it will be construed against the person who has created the contract a very very useful principle which can be applied to a whole lot of cases where one party is at a lower level of bargaining capacity and a contract is ought to be put against next now the party's own wrong a contract will be construed so far as possible in such a manner as to not permit one party to take advantage of his own wrong in read was as far as a tenant who had failed to pay his rent asserted that by reason of a proviso for reentry which the lease would be void in the event of breach of obligations of his lease Lord Elen Mero said in this case as to this proviso it would be contrary to a universal principle of law that a party shall never take advantage of his own wrong if we were to hold that the lease which terms is a lease for 12 years should be a lease determined at the will and pressure of the lessee that a lessee by not paying his rent would be a liberty to say that the lease is void so where a person does something which is to the disadvantage of another person he cannot in the interpretation of the terms of the contract seek to take advantage of that that is another very salutary principle which the court applies quite frequently express mention of a part of a subject matter where the contract expressly mentions certain things it is often to be inferred that other things the same general category which are not expressly mentioned were deliberately omitted similar principles apply to the express inclusion of obligations dealing with a particular area of application in SS in private limited versus Smith it is hardly necessary to clothe the thought and authority or Latin guy if one alternate is expressly and specifically mentioned it rationally tends to exclude the implication of another or of any other next in the arbitration between holy hill rubber company private limited and the royal insurance and insurance policy stated that this policy does not cover loss of damage by explosion except loss of damage caused by explosion of illuminating gas banks LJ said the exception of one particular kind of explosion from the general explosion of explosion shows that the parties intended to improve from the risk covered by the policy all kinds of explosion other than the one expressly accepted so this is once again a principle that has been frequently applied in terms of interpretation of insurance contracts next contract to be construed as to be lawful where the words of a contract are capable of two meanings one which is lawful and the other unlawful the former construction should be prepared a contract for assignment of a lease provided that if license to assign was delayed beyond a certain date the purchaser would pay the purchase price to the vendor and the vendor would thereupon allow the purchaser to enter into occupation pending completion and the purchaser would pay the rent and other outgoings it was held that allow meant lawfully allow that is you can't margin to it and claim protection of this clause and consequently did not cover entry into occupation in breach of covenants or entry made forcefully thanks to the generous principle generous principle is also a principle which we apply in statutory interpretation and to the same extent and with the same rigor or rather felicity it is also applied to interpretation of contracts if it is found that the things described by particular words have some common characteristic which constitute them a genius the general words which follow them ought to be limited to the things of that genius in Sunfire officers was as hard Lord Watson said it is well canon of construction well-known canon of construction that where a particular enumeration is followed by such words as or other the latter expression ought if not enlatched by the context be limited to matters we just in generalist with just those specifically enumerate it is generally you know it is said that words take the meaning from the company they keep so the you just a principle is actually an embodiment of that then meaning is known by context in companion varia case the doctrine that is another doctrine that is used frequently in interpretation of statutes the doctrine also does see is exemplified in the dictum of Lord in the dictum of Lord in Timbs and mercy Merride however general may be limited with respect to the subject matter in relation to which they are next in watchhorn vs. Ligford a policy of fire insurance covered stock trade household furniture linen varnish and plate the insurance who was a coach a coach player and co-keeper had brought a large amount of linen on specklish, which was destroyed in fire. His claim under the policy was rejected and dot LNMROL. I'm clearly of the opinion that linen in the policy does not include articles of this description. Here we may apply Nosider associe. The preceding words are household furniture and succeeding are wearing a parent. So the word takes its meaning from the company it keeps. With the company it keeps, what are the two words? The two words are household furniture and succeeding wearing a parent. The linen must be household linen or a parent. Executory and executed contracts. The courts reluctant to hold a permission in a contract void for uncertainty is greater in the case where the agreement is no longer executory but has been partly performed. The distinction between executed and executed contracts was again brought by Lord Templeman in some sub-moved trading estate limited versus Egleter, where an agreement which would otherwise be unenforceable for want of certainty or finality in an essential stipulation has been partly performed so that the intervention of the court is necessary in aid of a grant that has already taken effect. The court will strain to the utmost to supply the want of certainty even to the extent of providing a substitute missionary. So this is a very important principle in respect of a contract which is halfway through and there is some ambiguity about how the rest of the contract is to be performed. The court will interpret the contract in such a way that will facilitate the completion of the project and not an interpretation that will lead to a breach or termination of the execution of the contract. Next. A deeming clause may operate in a number of different ways. This again deeming clauses are very common and we come across them quite frequently. A deeming clause may operate in a number of different ways. It may expand the ordinary meaning to be given to a word or phrase in the contract. It may prescribe consequences of taking or failing to take some step or the consequence of some external event. It may be used to put beyond doubt whether a given state of affairs falls within the contractual provision. It may be used to create a contractual estoppel. It may also qualify contractual obligations that would otherwise have arisen where a deeming clause is used. It will usually be conclusive as to the deem the meaning or consequences. Tax advices in this case, that is, WJHM children versus Olympia securities commercial, tax advices were engaged on the basis of a success fee as a percentage of tax same. Condition three of the terms of engagement stated that if an invoice was not disputed within a specified time limit, you will be deemed to have agreed to its terms. It was held that though the deeming provision might preclude challenge to the number of hours worked, it did not preclude challenge to the question whether the event amounting to success has actually occurred. What this judgment shows is that the deeming clause will strictly be applied only to the aspect that is to be deemed and it cannot be stretched to include other aspects. Next, mistake is again something where the quotes are called into interpret. The mistake to be corrected must be a mistake in expression. It may be a mistake in spelling or grammar, a mistake in the deeming of persons referred to, the verbition or words or inclusion of words or the use of the wrong words. Many of the early cases involving the correction of errors by constriction arose out of the misuse of Latin in which the legal documents were frequently written. It is a rule of law, malagrammatica, non-vittai, neither false Latin nor false English will make a deed void where the intent of the parties both plainly appear. A bill of sale to secure a loan of 70 pounds and interest stipulated that principal and interest should be repaid by monthly instalments of 7. The words, pounds or supply. So where it is plain that what the parties would have intended, the fact that there is a mistake and that has not actually been stated will be supplied by the court because they can do that in exercise of the powers of interpreting contracts. Next. Now I have referred to principles and have referred to various case laws of British courts. But these, as I said, much of what the Indian contract act today as it is applied in India have borrowed quite heavily from the English law. So it is worthwhile to look at some of the Indian cases which have been decided by our courts. In the Bank of India and another versus K Mohandas is once again a case relating to application of the principle of contract in this landmark judgment about the voluntary retirement scheme, Judge Lothia iterated that since it was the bank that drafted the terms, they shall endure the risk caused due to lack of clarity. He said in these circumstances, the interpretation will be against the party that drafted the policy. It was held that the octies of voluntary retirement under that scheme will be eligible to pension under the pension regulation 1995. In KSL industries versus National Textiles Corporation Limited, the Delhi High Court ruled in favor of the petitioner when there was an ambiguity in interpretation, thus using the doctrine as a precedent while deciding cases. Next. The Honorable Supreme Court and Export Credit Guarantee Corporation of India versus Gerksons Limiter National, the contract must be read as a whole and every attempt should be made to harmonize the terms thereof keeping in mind that the rule of contra-preferendum does not apply in case of commercial contract. For the reason that a clause in a commercial contract is bilateral and has mutually been agreed upon. Courts in India have generally agreed that commercial contracts should not use the benefit of a contra-preferendum rule. Where equal parties are pitched against each other, usually the principle of contract contra-preferendum will not be applied by the court. It is only when bargaining capacity of one of the parties is weaker than the other party that the court steps in and applies the principle of contra-preferendum. Next. Express your units as exclusive LTDS means that where an express intention is being made at the instrument in respect of a certain thing, this will exclude any other thing of a similar length. In swastik, gas's primary commitment versus Indian oil corporation, it was held that by making a provision that the agreement is subject to the jurisdiction of the courts at Calcutta, the parties have impliedly excluded the jurisdiction of other courts. Hence, it was held that where the contract specifies the jurisdiction of courts at a particular place and such courts have jurisdiction to deal with the matter, an inference may be drawn that parties intended to exclude all other courts. Next. Nositor associate means that the meaning of an unclear or ambiguous word may be determined by considering the words immediately surrounding it. In the case of the Income Commissioner of Income Tax versus Bharati Sir Ligur, it was held that since the term technical services used in section 194J of the Income Tax Act is unclear, the said word would take color from the words managerial or consultancy between which it is sandwiched. These terms managerial and consultancy services necessary involve a human intervention. Therefore, applying Nositor SOC, the word technical would also have to be construed as involving a human element. Thus, it was held that since interconnection and port access services rendered by the asset seed not involved very human interface, they cannot be recorded as technical services under section 194J of the Income Tax Act. Yes. Next. Parole. It's a very interesting rule. Parole of evidence, the rule of parole evidence is a rule of contract interpretation that bars the admission of an extentsic evidence of prior agreements that modify contradict or vary the terms of the contract. The Supreme Court, in that's a very decent judgment, Mangalavaman Karandikar versus Prakash Thamodhar Pranade elucidated that unless ambiguity in the language was established, parole evidence that contradicts the contract should not be introduced. Since the language of the impugned contract was clear and unmanned because the court should not consider extentsic evidence. The court held in favor of the upland by concluding that the license was created for the continuation of the business rather than the lease of the shop premises. The Honorable Apex Court in Kharga Company Ltd. Mrs. Raymond held that we agree that when a contract has been reduced to writing, we must look only at what to that writing for us attaining the terms of the agreement between the parties. But it does not follow from this that it is only what is set out expressly and in so many words the document that can constitute a term of the contract between the parties. If on a reading of the document as a whole it can be fairly deduced from the words actually used therein that the parties had agreed on a particular term there is nothing in law which prevents them from setting up that term. The terms of a contract can be expressed or implied from what has been expressed. It is in the ultimate analysis the question of construction of the contract and it is well established that construing a contract would be legitimate to take into account surrounding circumstances. This relief is also goes in line with Lord Hoffman's principles as to a study of the surrounding circumstances to understand the terms of the contract. Next. Okay now we have come to the end of this presentation. So this as I said in the beginning of my presentation is only to enable you to appreciate and kindle your curiosity with respect to the subject of interpretation of contracts. And I hope that you profited from hearing my presentation for the last 60 minutes or so. Thank you. Thank you Vikas. Thank you sir. The way you are traversed through the various doctrines and the interpretations as such is quite enriching. There is one question. Validity of public-private partnership contracts having no well-defined laws result in entirely arbitrary conditions being signed like roads etc. Concession agreements by different agencies. So I am just saying because it is only it is expression that the words are ambiguous. So one question you can say is please suggest the balance of rights and responsibilities in PPP contracts forcibly imposed by the ruling government of the public. For example two lane roads with paved should trend emerge from Tamil Nadu and spread across the country having no technical basis. What is your opinion? Yeah basically see the business of interpreting contracts I told you the basic principles that will apply but in factual situations much will depend upon what type of evidence is available by the court and what has been provided by the parties to enable the court to understand the basis of the law. But as advocates it is essential for us to understand the principles that are likely to be applied and where the court is unaware of these principles is to invite the court to apply these principles to the contracts before them and that generally would be a salutary approach to the problems that have been posed in the questions. So the last question why do we still follow the British law? No why do we still borrow the British law as I said this we should not be following British law I agree but today in the world of contracts we are becoming a global village and every day you purchase products on Amazon Flipkart. So it is not today so much as English law but more the principles that are being accepted all over the world in the subject relating to law of contracts. But I always think that when you need to understand a law you need to understand the reason behind a law right. So why is it important that we must read the English law is it is from that found that all this originate. So many times you can also show for the court that the principles that we are applying in India have taken a divergence from the principles that are applied in Europe. That is because as most parliaments frequently review the state of a particular law and bring in amendments right. For example today we say that the Singapore courts are the best courts where I have it in respect of arbitrations but we must understand from the year 2000 when the present law applicable to arbitration in Singapore was enacted till now the law has undergone six changes six amendments but take the same case with Indian law from 1996 till the first amendments came in 2014 and the other amendments very you know very minor amendments came in 2019 we have not had many amendments to the law. So it is good for parliament to constantly keep tracking the development of a particular law and to provide for elimination of any ambiguity by bringing in proper enacted provisions. So today there is a need that the Indian contract act must be reviewed to bring it online with what happens all over the world and that is especially so for advocates because we are called on to unwaist clients. So the problem that we find is in terms of judgment law we I sit in Tamil Nadu and I'm looking at a particular contract and I find that there is a particular judgment of the Madras High Court which is applicable then I find that there is a judgment of the Bombay High Court which says something completely different. So this all leads to a confusion and if India is to function as one integrated business unit then it is essential that we have some sort of a commonality with respect to the principles that we apply and that is why it is essential that in this 150th year of the Indian contract act we call for an amendment to the act to bring it in line with principles that have been accepted world. So few questions that come which are not related to the topic we have said that section 73 and 74 they can watch the session of the senior councillor Arvind Kamat and the second question is in respect of the sale leads. So thank you everyone stay blessed thank you stay safe and taking the wide spectrum of the various interpretations I think and that too in a simplified manner everybody would enjoy everyone stay safe stay blessed