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Interpretation of contracts: you may not get a judgment if you do not set out the factual matrix


The factual matrix may have to be set out and proved in a case involving the interpretation of an ambiguous contract.


The Supreme Court of Appeal in Firstrand Bank v Clear Creek Trading held that it could not give judgment on the interpretation of a disputed contract because background information, which was crucial to interpreting the contract, had not been provided by the parties.


The issue related to whether the National Credit Act applied to the agreement. The standard form contract contained reference to the National Credit Act, but it was later argued that the NCA may not apply at all.


It was found that some sections of the NCA incorporated into the contract conflicted with other sections of the NCA also incorporated. That anomaly placed a question mark over whether any consideration was given by either party to those parts of the contract which refer to the NCA.

The court said that the circumstances as to how the document came to take the form it did is highly relevant, particularly since what was signed appeared to be a standard form document. Without relevant background information, the court could not properly decide whether the parties intended the NCA to apply or not.

#draftingcontracts

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