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High Court Applies Business Common Sense to Allow Solicitor to Charge Client

on Tuesday, 09 August 2022.

Despite best intentions, parties do not always make everything clear in their commercial contracts. The High Court had to decide on the interpretation recently when a contract was not clear.

A 2011 Supreme Court decision (Rainy Sky v Kookmin) showed that where drafting is unambiguous, it must be applied; but where two tenable readings of a clause are possible, the court can prefer the interpretation most consistent with business common sense. In the case of BlackLion Law LLP v Amira Nature Foods Ltd, the High Court has applied this.

What Was the Case About?

A clause provided that a law firm would charge its client, ANF, a fixed fee of £300,000 - but "subject to the completion of the Matter by 31 May 2017". The matter did not complete by that date. ANF claimed this meant that no fee would be payable. The law firm argued the words were intended to show whether the fee was entirely a fixed fee or whether additional charges could apply for any work after 31 May 2017 - it would not make business common sense to mean that no fee would be payable at all.

What Did the High Court Say?

The High Court sided with the law firm (the Claimant). 

The Judge noted that the wording was unclear. However, the claimant's construction of the wording was more consistent with commercial common sense, in light of the background context. It was not market practice for a law firm to be paid solely a success fee on a project of this nature. No reasonable business would agree to a contingent fee arrangement when, at the time when the contract had been agreed, most of the work was done and the prospects for the project were not good. The claimant law firm was a small business and it would not tie up its staff on a significant project only to be paid if successful.

What Does This Ruling Mean for You?

This case does not create new law. However, it reinforces that many contracts are not as clear as they could be, and when that happens the courts will strive to give effect to what has most common sense from a business perspective.

Of course, the parties spent time and effort in having to go to court to get to this decision - and it would have been preferable for them if the contract had been clearly drafted in the first place.


If you would like advice on drafting and negotiating clauses in your commercial contracts, please contact Paul Gershlick in our Commercial Contracts team on 07795 570 072, or complete the form below.

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