It is always important to make sure your contract terms work for you and provide the necessary protections and rights of recovery.
The recent case of Quantum Advisory Ltd v Quantum Actuarial LLP  EWHC 1423 (Ch) highlights the importance of the terminology used and definitions applied.
In that case the interpretation of the defined term ‘Services’ was reflected upon. Services was defined in the agreement as the ‘provision of pensions consulting, actuarial, administrative and investment services, including by, way of example…’ The court was asked to consider whether the defined term included tendering for new or repeat business.
During negotiations of the contract, it was agreed between the parties that the defendant would service the claimant’s clients, with the defendant receiving a fee income from those clients for provision of their services. They agreed that the term would last for 99 years to cover new clients. The defined term gave a non-exhaustive list as examples, but this list did not expressly cover the tendering for new or repeat business. Both the long-term nature of the agreement and the importance of efficiency to the claimant’s business were considered by the court.
However, those factors were not enough to ignore the ordinary meaning of the terms expressly written in the agreement. ‘Administrative services’ and ‘other administrative support as the claimant’s business may reasonably require from time to time’ were included in the non-exhaustive list but the judge ruled that they did not include the specific task of tendering.
Although the purpose of the agreement was known – that efficiency required tendering – the take away from this case is that the actual language used in the contract is more important.
Investing in having the right foundations in place can pay dividends in the long run. The starting point of any dispute is what terms the parties have actually signed up to. Whilst there is always room for aggrieved parties to seek to challenge terms on unfair or competitive grounds, the aggrieved party will then be put to the cost and associated risks of a particular challenge.
It is crucial that you ensure your contract terms reflect exactly what you intend the contract to do. Errors in drafting could lead to additional costs being incurred later down the line.
For more information on this topic, contact Wilson Browne Solicitors on 0800 088 6004 or visit www.wilsonbrowne.co.uk