“In consideration of [supplier] entering into and continuing performance of the [P40/P38] Purchase Order and its request for its security for the payments due from FCI under the Purchase Order, the parties hereto agree that in the event FCI fails to make any payment when due under the Purchase Order, Brasoil confirms an irrevocable commitment upon first written request from [supplier] to make payment directly to [supplier] subject always to aggregate of any and all such payments not exceeding (US$ ). FCI acknowledge and agree that any payment made by Brasoil hereunder shall as between FCI and Brasoil be regarded as payment by Brasoil to FCI which may be recovered (subject to the settlement and reconciliation of all claims, costs and expenses due to either party which are hereby reserved) by Brasoil from FCI including, by way of deduction from any sums due to FCI from Brasoil under the provisions of the Supervision Agreement. FCI and [supplier] shall request Brasoil to countersign this Side Letter confirming agreement to the contents hereof. This letter is not to be used as a guarantee to any other parties besides the undersigned and will be governed by the law and jurisdiction provisions of the Supervision Agreement.”
‘At the request of FCI and FPCI, Brasoil agrees to pay the Settlement Sum, the Retention amounts for both P38 and P40 and all third party reimbursable costs to JSL in accordance with the terms of this Agreement and such payment shall be treated as made by Brasoil for and on behalf of FCI and FPCI.’ ii) By Clause 4: ‘The last unit either P38 or P40 (as the case may be) to depart Singapore will only be delivered by JSL against receipt by JSL at its account No.0001-000029-01-0-022 with DBS Bank Singapore of the entire Settlement Sum and all third party reimbursable cost in full for both P38 and P40 and without deduction whatsoever and not otherwise.’ iii) By Clause 5: ‘The Settlement Sum represents the agreed balance of all amounts due to JSL in respect of the Conversion Works and the Additional Works under the terms of the Sub-Contracts.’ iv) By Clause 8 (headed ‘No More Claim’): ‘BRASOIL, FCI and FPCI hereby agree and confirm that they have no further claim/backcharge whatsoever against JSL in respect of the Conversion Works and Additional Works and JSL hereby agree and confirm that they have no further claim/backcharge whatsoever against BRASOIL, FCI and FPCI except for the agreed third party reimbursable cost.’
“‘(1) Interpretation is the ascertainment of the meaning which the document would convey to a reasonable person having all the background knowledge which would reasonably have been available to the parties in the situation in which they were at the time of the contract. (2) The background was famously referred to by Lord Wilberforce as the “matrix of fact”, but this phrase is, if anything, an understated description of what the background may include. Subject to the requirement that it should have been reasonably available to the parties and to the exception to be mentioned next, it includes absolutely anything which would have affected the way in which the language of the document would have been understood by a reasonable man. (3) The law excludes from the admissible background the previous negotiations of the parties and their declarations of subjective intent. They are admissible only in an action for rectification. The law makes this distinction for reasons of practical policy and, in this respect only, legal interpretation differs from the way we would interpret utterances in ordinary life. The boundaries of this exception are in some respects unclear. But this is not the occasion on which to explore them. (4) The meaning which a document (or any other utterance) would convey to a reasonable man is not the same thing as the meaning of its words. The meaning of words is a matter of dictionaries and grammars; the meaning of the document is what the parties using those words against the relevant background would reasonably have been understood to mean. The background may not merely enable the reasonable man to choose between the possible meanings of words which are ambiguous but even (as occasionally happens in ordinary life) to conclude that the parties must, for whatever reason, have used the wrong words or syntax. (5) The “rule” that words should be given their “natural and ordinary meaning” reflects the commonsense proposition that we do not easily accept that people have made linguistic mistakes, particularly in formal documents. On the other hand, if one would nevertheless conclude from the background that something must have gone wrong with the language, the law does not require judges to attribute to the parties an intention which they plainly could not have had. … .”
“we do not easily accept that people have made linguistic mistakes, particularly in formal documents”
“if detailed semantic and syntactical analysis of a word in a commercial contract is going to lead to a conclusion that flouts business common sense, it must be made to yield to business common sense.”
“In determining the meaning of the language of a commercial contract … the law … generally favours a commercially sensible construction. The reason for this approach is that a commercial construction is more likely to give effect to the intention of the parties. Words are therefore interpreted in the way in which a reasonable commercial person would construe them. And the standard of the reasonable commercial person is hostile to technical interpretations and undue emphasis on niceties of language.”