Revolutions in Contractual Interpretation: A Historical Perspective

A literalist approach to contractual interpretation is often described as the ‘traditional approach’ of the common law, with the broader ICS principles seen as an unprecedented modern aberration. This paper argues that a flexible, contextual approach to construction is in fact deeply rooted in the history of English law. It focuses on contractual interpretation in the sixteenth century, showing that the early modern courts consistently prioritised the parties’ intentions at the expense of the ordinary meaning of their words. These intentions were identified by asking what a reasonable party would have intended in the circumstances, a technique based on sophisticated conceptions of legal instruments. The paper then examines later criticism of this approach, and the courts’ resulting turn towards formalism. It argues that modern lawyers should pay more attention to the historical development of contractual interpretation, which can provide a valuable new perspective on the law of our own time.