When you tell businesspeople that Canadian and English courts now recognise commercial common sense as a principle to be used in interpreting a contract, the response can be a look that says, 'it took you lawyers how long to get to this point?' The English Court of Appeal has suggested, however, that common sense has limits as an interpretive guide. It may be considered where there are two possible interpretations of an agreement, but only one of them that makes sense from a business perspective: see Rainy Sky SA v Kookmin Bank, [2011] UKSC 50. But, the Court of Appeal has said in BMA Special Opportunity Hub Fund Ltd v African Minerals Finance Ltd, [2013] EWCA Civ 416, commercial reasonableness or common sense is 'not to be elevated to an overriding criterion of construction', because to do so runs the risk of letting a judge impose his or her 'own notions of what might have been a sensible solution to the parties' conundrum'. The courts should interpret what the parties intended from the words they have chosen, and in accordance with commercial expectations, but should not rewrite the parties' bargain, even where it is a bad one from one their perspectives.

In BMA itself, the clause at issue entitled the lenders to a prepayment fee if the borrower made a voluntary prepayment. The borrower made a prepayment as a result of a voluntary refinancing with another lender. The trial judge thought that while the refinancing was voluntary, the resulting prepayment was not and no fee was payable. He expressed doubt that this accorded with business common sense, but concluded that it was consistent with the wording of the actual clause. In the Court of Appeal, Aikens LJ emphasised the primacy of the language negotiated by the parties. Business common sense enters into it when the drafting could bear two meanings, one of which accords with commercial realties and one of which does not, but is not the starting point. Nor should business common sense be used to arrive at a result that seems like more reasonable from the point of view of one party but not the other. Although it might seem that a voluntary refinancing resulting in a prepayment ought to trigger the prepayment fee, it was clear from other provisions of the agreement that the prepayment fee was to be paid in a defined range of circumstances and was not voluntary because the borrower was contractually obligated to prepay if it refinanced. The contract was clearly carefully negotiated and drafted -- and, as a result, its limitations on the circumstances giving rise to the prepayment fee 'the essence of "commercial common sense"'.