Contractual interpretation rules widened, again

In the recent Court of Appeal case of Thomas Crema v Cenkos Securities plc, it was held that, when interpreting a contract, whether written or oral, a court should be entitled to take into account ‘market practice’ in making its determination as to whether a term should be implied. Previously, English courts have generally only been willing to imply terms into written contracts on the basis of a particular trade’s usage or custom in limited circumstances i.e. where the practice is ‘notorious, certain and reasonable’, and not ‘contrary to law’.

The question of whether market practice was relevant was ultimately not a decisive factor in the Court of Appeal’s judgment in this matter. However, the reasoning of Lord Justice Aikens clarifies that, for the purposes of deciding whether a contractual term should be implied, the relevant factual matrix which should be taken into account when trying to ascertain the objective intention of the parties when agreeing a contract, may be extended to take into account market practice. This may be the case notwithstanding the fact that such practices may not necessarily constitute ‘trade usage or custom’, nor that the contracts in question were not wholly in written form.

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