The role of 'business common sense' in the construction of commercial contracts

Abstract

The Supreme Court's decision in Rainy Sky SA & Ors v Kookmin Bank re-emphasises that the ultimate aim of construing a contractual provision is to ascertain what the parties meant by the language used, based on what a reasonable person would have understood the parties to have meant; and that the courts can adopt the construction which is most consistent with commercial common sense. This article examines whether the judgment means that, where there is an ambiguous term, the court can apply the ''commercially sensible'' test before (or instead of) the ''reasonable person'' test.