Interpretation of contracts – Don’t relegate the written text

The Supreme Court of Appeal has decried the growing tendency to lead evidence about what experts think a contract means and about the subjective intention of the parties and details of their negotiation. The written text must not be relegated, but must be considered having regard to the context in which the agreement was entered into. The point of departure is the language of the document in question. Evidence of the intention of the parties or of their prior negotiations is not admissible except occasionally in the face of enduring ambiguity. Words have to be interpreted in their context sensibly and not so as to have an un-business-like result. In the case of The City of Tshwane Metropolitan Municipality v Blair Atholl Homeowners Association there was a dispute between the homeowners association and the municipality regarding an agreement reached to supply water outside the municipality’s normal area. The question was the meaning of the obligation of the municipality to…

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