Contract position
Contract interpretation disputes
Both parties read the same clause. Both were confident. Neither was going to be persuaded by the other reading it to them again.
The situation
Correspondence written for a third party
A dispute over an extension of time and its associated loss and expense had reached the point where correspondence was being written for a third party rather than for the recipient. Each side had taken a position early, then spent months defending it.
The commercial reality was that the gap between the two positions was smaller than either party believed. What kept it open was that neither side had tested its own case, only the other side's. Additionally, both were relying on advisers who were, by appointment, advocates.
An independent assessment is uncomfortable for exactly this reason. It examines your position with the same rigour it applies to theirs.
What we found
The clause was clear. The record was not
The clause was not ambiguous. What was ambiguous was the factual record it had to be applied to.
Notices had been issued, but several did not identify the relevant event in the terms the contract required, which weakened entitlement independently of the merits.
Delay had been assessed against the programme as built, not against the contract programme. Consequently the analysis answered a question the contract did not ask.
Loss and expense had been calculated on a formula basis where the contract required substantiated cost.
On one head of claim the client's position was simply wrong. That was said early, in writing, before it was discovered by the other side.
What changed
Entitlement first, quantum second
A well evidenced valuation of an entitlement that does not exist is worth nothing. Each head of claim was rebuilt against the contract mechanism and the contemporaneous record, in that order.
Test entitlement before valuing anything
Every head was graded on the clause, the notice and the causation before a single figure was assessed, which redirected effort onto the items that could actually be proved.
Reassess delay against the right baseline
The analysis was rerun against the contract programme rather than the programme as built, so it answered the question the contract asks.
Concede the item that was wrong
Where our client's position could not be supported, that was conceded at the start rather than defended to the door of the hearing. Concession is what makes the rest of a position credible.
Narrow the dispute to what is genuinely contested
Two real points of difference remained. Both settled without adjudication, principally because each party could see the same analysis and neither could dismiss it as advocacy.
Why this happens
Disputes rarely begin as disputes
They begin as differing assumptions about scope, responsibility or valuation method, and they harden because each party keeps commissioning analysis from someone whose job is to agree with it.
Final accounts and disputes is built around the opposite discipline: a position structured to withstand scrutiny, not to advance a claim. Moreover, most of these positions are decided long before the dispute, in how change was recorded under cost control and variations while the works were live.
Questions
Asked about contract interpretation
Why do amended standard forms cause so many disputes?
Because amendments are drafted clause by clause while the form operates as a whole. Change a payment provision without following it through the notice regime, or transfer a risk without adjusting the relief that sits behind it, and the contract produces an outcome neither party intended. Standard forms are internally consistent by design. Every amendment is a small break in that consistency, and disputes tend to surface where two amendments interact.
Does what the parties intended matter?
Far less than most clients expect. English law interprets a contract by what a reasonable person with the parties' background knowledge would understand the words to mean, not by what either party privately intended. Pre-contract correspondence is generally inadmissible on interpretation. That is why an ambiguity resolved in a meeting, and never written into the document, provides almost no protection when the position is later tested.
What should be reviewed before signing?
The payment and notice regime, the change control mechanism, the extension of time and loss and expense provisions, the position on design responsibility, and every amendment against the clause it modifies. Those are where the money is. A review that reads the amendments in isolation misses the interactions, which is where the expensive surprises live. This is quick work relative to its value and it can only be done once.
How is a dispute over meaning usually resolved?
Most are resolved commercially, because the cost of establishing the answer exceeds the sum in dispute. Where that is not possible, adjudication gives a decision within a statutory timetable that binds until finally determined, which is why it dominates in practice. Assessing the strength of a position before entering that process, rather than during it, is what allows a realistic settlement to be reached. A weak position identified early is still worth knowing.
Can a commercial consultant advise on interpretation?
On how a clause operates commercially and what it is worth, yes, and that is often the question a client actually needs answered. On what a clause means as a matter of law, no, and we say so rather than blurring the line. Our work is establishing the numbers, the records and the commercial consequence of each reading, which is what a solicitor needs in order to advise properly and what a client needs in order to decide.
Related scenarios
Where this connects
Position hardening on both sides?
Send the contract, the notices and the correspondence. We will tell you what the record supports before anybody commits further.
Insights