Case summary: The claimant wanted to refer in evidence to certain pre-contract statements made in the course of negotiations of an option deed (in an attempt to establish the true construction of one of the clauses in that deed). The Court confirmed that only if it was alleged that the parties had negotiated using terms that had a particular agreed meaning (as in Rugby Group Ltd v Proforce Recruit Ltd (2006)) or that there was an estoppel by convention, or that the contract should be rectified, was evidence of pre-contract negotiations admissible. Admissibility of pre-contract negotiations as an aid to the construction of a written contract that was intended to contain all the agreed terms is not permissible.
Comment: In the Rugby Group case, the Court exceptionally allowed evidence of pre-contract negotiations, where the parties had used a term (“preferred supplier status”) that, it was alleged, bore a privately understood meaning between the parties. However, parties should ensure that the wording of each clause in their contract reflects their agreed intentions. The circumstances in which a party can rely on pre-contract negotiations to interpret contractual provisions are limited.
Great Hill Equity Partners II LP v Novator One LP and others (22/05/07)