There has always been a tension between the literal application
of poorly worded contractual provisions and the need to apply
common sense to avoid commercially absurd results. But in recent
years, the centre of gravity has moved towards the former and away
from the latter. Modern thinking in contractual construction is
that the search for the parties' intention is to be found
primarily in the words that they have used. Parties are assumed to
have meant what they said and it is not the function of the courts
to repair a bad bargain.
One area which has bucked this trend is subrogation in the
context of joint insurance provisions. There are a number of
commercial fields, in particular the construction industry, in
which it is normal for parties to make provision for disaster, and
to seek to avoid the inevitable disputes that follow it, by putting
in place insurance designed to cover both parties against the
ensuing losses. These arrangements often provide for the
