- William Kanaan
Relying on worked examples in commercial agreements
In only the second decision on this type of issue, the High Court has ruled that sums due under a contract should be calculated as per the worked examples which are integral parts of the contract terms and which explain how an adjustment was to be calculated.
The court went further to say that this was the correct interpretation of a formula consisting of a narrative and two worked examples, where the worked examples contained a step not set out expressly in the preceding narrative.
It is common in lengthy and complex contracts to draft illustrations or examples to assist the parties in clarifying the meaning and/or intention of words used. The court should not focus too narrowly on the dictionary meaning of individual words and phrases but instead it should look at the terms of any particular provision in its commercial context and against the landscape of the whole instrument.