Globalizing India Inc.

UK COURT RELIES ON EXTRANEOUS CIRCUMSTANCES TO DETERMINE THE SCOPE OF A WARRANTY IN A SPA

Courts in India or in other jurisdictions such as the UK commonly interpret a contract based on a plain and simple reading of the clauses. Occasionally, in instances where a simple construction of the contract leads to ambiguous or commercially unreasonable results, courts endeavor to ascertain the actual intention of the parties at the time of signing of the contract. Such an exercise to ascertain the commercial intention of the parties is carried out by reading the contract as a whole. Courts rarely attempt to ascertain the commercial intent of the parties by relying on external factors such as surrounding circumstances at the time of signing of the contract, communication prior or at signing of the contract etc.