Principles surrounding the construction of commercial contracts

The principles surrounding the construction of commercial contracts are well established.

In Electricity Generation Corporation v Woodside Energy Ltd (2014) 251 CLR 640; [2014] HCA 7 at [35] the plurality (French CJ, Hayne, Crennan and Kiefel JJ) stated,

“The meaning of the terms of a commercial contract is to be determined by what a reasonable businessperson would have understood those terms to mean”.

The Court stated that

“it will require consideration of the language used by the parties, the surrounding circumstances known to them and the commercial purpose or objects to be secured by the contract”

You can also see further in Mount Bruce Mining Pty Ltd v Wright Prospecting Pty Ltd (2015) 256 CLR 104; [2015] HCA 37 at [46]-[49]; Simic v NSW Land and Housing Corporation (2016) 260 CLR 85; [2016] HCA 47 at [78]; Ecosse Property Holdings Pty Ltd v Gee Dee Nominees Pty Ltd (2017) 261 CLR 544; [2017] HCA 12 at [16]; Victoria v Tatts Group Limited (2016) 90 ALJR 392; [2016] HCA 5 at [51].

As was pointed out by Gleeson CJ in McCann v Switzerland Insurance Australia Ltd (2000) 203 CLR 579; [2000] HCA 65 at [22], commercial contracts should be given a businesslike interpretation and that requires attention to the language used by the parties, the commercial circumstances which the document addresses and the objects which it is intended to secure.

Source: [229] Macquarie International Health Clinic Pty Ltd v Sydney Local Health District [2020] NSWCA 161 per Bathurst CJ