Michael Budd on the importance of precision in drafting the wording of contractual terms in view of commercial consequences
- Supreme Court summarises the principles of interpreting disputed contractual terms.
- Indemnity in share purchase agreement had rival interpretations.
On 29 March 2017, the Supreme Court delivered its judgment in the case of Wood v Capita Insurance Services Limited [2017] UKSC 2, [2017] All ER (D) 39 (Jan). Whilst the judgment was expressed as not changing the law (some may argue otherwise), the case does at least serve as a useful reminder of the principles that a court will consider when contractual terms are in dispute.
The case concerned the acquisition by Capita of the share capital of a company known as Sureterm Direct Limited, which was in the business of selling car insurance. After completion of the purchase, Capita discovered that the company had misled its customers and made them pay higher premiums by having them believe underwriters had required a higher premium or that the customer had a worse risk profile than in fact was the case.
Capita and the company were obliged to inform