EP3 – ‘’Has any legally-designed contract been litigated?’’

The third episode of our series on LD seen by judges (courts, litigators, its use in class actions…) focuses on litigation and designed contracts. At Amurabi, one of the most recurring questions we get during workshops and conferences is ‘’Has any legally–designed contract been litigated?’’. On our part, none of our contracts have been litigated, but there is indeed a very interesting and recent case that we will develop here.  litigated

 In July 2020, a High Court judgement was rendered (Altera v. Premier Oil) in which a boilerplate clause contradicted an appendix which had been designed and visualized. A case that demanded to the court to rule on the “worked examples” and “illustrations”.  

 The conflict revolved around what was said in the body of the bareboat charter agreement, which was boilerplate, and two worked examples that were part of an appendix of that agreement. As some of the steps included in the worked examples were not set out in the body of the agreement, the point was to determine whether the operative provisions took precedence over the two worked examples, or the opposite.  

 Interestingly, the decision is based on the belief that the real intent of the parties is to be found in the worked examples rather than the boiler plate. This decision is based on one fact: as opposed to narrative explanations, the role of the worked examples is to demonstrate the possible consequences of some clauses in various situations. 

And while it was specified in the body of the agreement that: “unless otherwise expressly provided, in the event of any conflict between…an appendix and the main body of the Charter Documents, the latter shall prevail’’, the judge nevertheless ruled in favour of the worked examples because it stemmed from these examples that the parties had really discussed them, as opposed to the body of the contract which was very much standard. It was stated that the two worked examples set out in the appendix took precedence over the operative provisions as these allowed for a more accurate interpretation of the contract. Therefore, the High Court considered that the intent of the parties lied in the appendix and not the boiler plate. 

“…in the context of lengthy contracts in financial transactions with much boiler plate, that illustrations or examples deserve particular attention as something to which the parties particularly turned their minds” 

This was only the second time, after the Starbev GP case, that the correct way of interpreting a worked “example” or “illustration” was addressed by English Courts. This ruling is important as it officially recognize “worked examples” and “illustrations” as not only integral parts of a contract, but also a key part of that contract, which can reveal the real intent of the parties. Moreover, it was recognized that these principles shall apply to not only financial contracts, but to all commercial contracts.  

Click here to see some examples of our own legal design examples in litigation, and in contracts.