In a recent decision, the Court of Appeal has re-emphasised the importance of the contractual wording when construing commercial contracts: BMA Special Opportunity Hub Fund Ltd & Ors v African Minerals Finance Ltd [2013] EWCA Civ 416.

The court noted that the starting point is the wording of the document itself and the principle that the commercial parties who agreed the provisions intended the words used to mean what they say. If there are two possible constructions, a court is entitled to prefer the construction which is more consistent with “business common sense” if that can be ascertained (see our post on the Supreme Court decision in Rainy Sky SA and others v Kookmin Bank [2011] UKSC 50). However:

  • “commercial common sense” is not to be elevated to an overriding criterion of construction;
  • the parties should not be subjected to the individual judge’s own notions of what might have been the sensible solution to the parties’ conundrum;
  • still less should the issue of construction be determined by what seems like “commercial common sense” from the point of view of one of the parties to the contract.

Here the court considered that the structure and wording of the relevant clause pointed to one clear meaning. There was no lack of “commercial common sense” in the clause, which was no doubt arrived at as a compromise after much negotiation. The court highlighted the fact that the parties to the contract were commercial entities who employed experienced commercial lawyers to negotiate the terms in very great detail over a period of three months, which supported the notion that the clause was intended to mean what it said. The result was that the borrower’s prepayment of a loan facility following a voluntary refinancing was held not to trigger a prepayment fee provision in the loan agreement.