DELETE FINAL SENTENCE, and INSERT:  The purpose of interpretation is not to identify the literal meaning of the words that the parties have used; but, rather, to identify what the parties to the transaction meant when they used the words that they did.

It follows that, although the starting point must be the words of the instrument [NOTE 1A], the Court may conclude that something has gone wrong in reducing the parties agreement to writing.  Such a conclusion may be justified by the express terms of the instrument itself:  eg, where the language does not make grammatical sense [NOTE 1B]; or the language is ambiguous [NOTE 1C]; or where the instrument uses what appears to be a technical term without providing a definition [NOTE 1D].  Such a conclusion may also be justified by reference to the objectively ascertained facts surrounding the conclusion of the agreement:  eg where it would be obvious to a reasonable person with the relevant backbground knowledge that there was a mistake in the language of the instrument [NOTE 1E]; or where the terms of an instrument appear to be contrary to commercial common sense [NOTE 1F].  Although the language of the instrument and at least some "surrounding circumstances" may be taken into account when considering whether something has gone wrong in reducing the agreement to writing, the current state of the law is that pre-contractual negotiations between the parties (which, by their nature, were intended to be superseded by the written instrument) are irrelevant at this part of the inquiry [NOTE 1G].

If the Court is satisfied that something has gone wrong in reducing the agreement to writing, it will be able to correct the error as a matter of construction if - and only if - it is clear what correction ought to be made in order to cure the mistake [NOTE 1H].  In considering whether it is clear how the error should be corrected, the court is entitled to have regard both to the language of the instrument and the surrounding circumstances.  Those circumstances will include matters which were known to both the parties, as well as prior agreements to which they were party [NOTE 1I]; but evidence of pre-contractual negotiations is admissible only where they demonstrate a clear concensus on the point at issue [NOTE 1J].  Where the correction involves interpolating words, the task will be easier if the precise words to be inserted appear on the evidence [NOTE 1K]; but it will be sufficient if the evidence identifies the gist of the words to be inserted [NOTE 1L].

INSERT NEW NOTES 1A to AL, as follows:

NOTE 1A: See e.g. B.C.C.I. v Ali [2001] UKHL 8, at [8] (Lord Bingham) and at [37]-[39] (Lord Hoffmann); Melanesian Mission Trust Board v Australian Mutual Provident Society [1996] UKPC 53; also J.I.S. (1974) Ltd v. M.C.P. Investment Nominees Ltd [2003] EWCA Civ 721, at [10] (Carnwath LJ); Holding & Barnes plc v Hill House Hammond Ltd [2001] EWCA Civ 1334, at [14]-[18] (Clarke LJ).

NOTE 1B: See Homburg Houtimport B.V. v Agrosin Private Ltd [2003] UKHL 13, at [23] (Lord Bingham).

NOTE 1C: See Investors Compensation Scheme Ltd v West Bromwich B.S. [1998] 1 W.L.R. 896 (H.L.), at 912-13 (Lord Hoffmann's third principle); The Karen Oltmann [1976] 2 Lloyd's Rep. 708 (Kerr J) (meaning of word "after").

NOTE 1D: See Proforce Recruit Ltd v The Rugby Group Ltd [2006] EWCA Civ 69 (meaning of expression "preferred supplier status").

NOTE1E: See Investors Compensation Scheme Ltd v West Bromwich B.S. [1998] 1 W.L.R. 896 (H.L.), at 912-13 (Lord Hoffmann's third principle); also East v. Pantiles Plant Hire Ltd [1982] 2 E.G.L.R. 111 (CA), at 112 (Brightman LJ); Holding & Barnes plc v Hill House Hammond Ltd [2001] EWCA Civ 1334, at [21] (Clarke LJ).

NOTE 1F: See Investors Compensation Scheme Ltd v West Bromwich B.S. [1998] 1 W.L.R. 896 (H.L.), at 912-13 (Lord Hoffmann's fifth principle); also Antaios Compania Naviera S.A. v Salen Rederierna A.B. [1985] A.C. 191, at 201 (Lord Diplock); Law Land Co. Ltd v Consumers Association Ltd [1980] 2 E.G.L.R. 109, at 111B-C (Brightman LJ).  See also Holding & Barnes plc v Hill House Hammond Ltd (above).  Such an approach is only permissible where the terms of- the instrument will bear a purposive construction:  see Equity & Law Life Assurance Society v Bodfield Ltd [1987] 1 E.G.L.R. 124, at 125F-H (Dillon LJ).

NOTE 1G: See Prenn v Simmonds [1971] 1 W.L.R. 1381 (H.L.), at [xxx] per Lord Wilberforce; Investors Compensation Scheme Ltd v West Bromwich B.S. [1998] 1 W.L.R. 896 (H.L.), at 912-13 (Lord Hoffmann's third principle); The Rio Assu (No.2) [1999] 1 Lloyd's Rep. 115 (C.A.), at 124 (Waller LJ); Alexiou v Campbell [2007] UKPC 11, at [15] (Lord Bingham); Chartbrook v Persimmon Homes Ltd [2008] EWCA Civ 183, at [105] (Lawrence Collins LJ), [187] (Rimer LJ) and [191] (Tuckey LJ).  For the possibility of future changes in the law, see e.g. Chartbrook v Persimmon Homes Ltd above, at [108]-[113].  See also The Interpretation of Contracts (Lewison) (4th Ed, 2007), at 69-78.

NOTE 1H: Homburg Houtimport B.V. v Agrosin Private Ltd [2003] UKHL 13, at [23] (Lord Bingham) and [192] (Lord Millett); East v. Pantiles Plant Hire Ltd [1982] 2 E.G.L.R. 111 (CA), at 112 (Brightman LJ); Holding & Barnes plc v Hill House Hammond Ltd [2001] EWCA Civ 1334.  See also paragraph 14-17 below

NOTE 1I: See H.I.H. Casulalty and General Assurance Ltd v New Hampshire Insurance Co. [2001] EWCA Civ 735, at [82]-[84] (Rix LJ).  Although an earlier agreement may be admissible, the court may be left not knowing what significance to attach to it (especially if the later instrument was intended to supersede the earlier agreement):  ibid; but see K.P.M.G. v Network Rail Infrastructure Ltd [2007] EWCA Civ 363 where weight was given to the words of an earlier agreement even though (objectively speaking) the term in question had been renegotiated.

NOTE 1J: See The Karen Oltmann [1976] 2 Lloyd's Rep. 708 (meaning of the word "after" identified by reference to the way the parties had used the word in their pre-contractual exchanges); Proforce Recruit v The Rugby Group Ltd [2006] EWCA Civ 69, at [31] (Mummery LJ) and [55] (Arden LJ).  However, evidence of an agreed meaning will not be admissible in a case where the clear terms of the instrument preclude this (e.g. where the expression in question is expressly defined in the instrument itself):  see Chartbrook Ltd v Persimmon Homes Ltd [2008] EWCA Civ 183, at [187] (Rimer LJ) and [192] (Tuckey LJ).

NOTE 1K: "I take it to be clear in principle that the court should not interpolate words into a written instrument, of whatever nature, unless it is clear both that words have been omitted and what those omitted words were...":  Homburg Houtimport B.V. v Agrosin Private Ltd [2003] UKHL 13, at [23] per Lord Bingham (emphasis supplied).

NOTE 1L: "Where [the court] can see, not only that words have been omitted, but what those words are, then it is its duty to supply them.  It is not necessary that the court should be certain precisely what words have been omitted; it is sufficient that it knows their gist": Homburg Houtimport B.V. v Agrosin Private Ltd [2003] UKHL 13, at [192] per Lord Millett.  This passage from Lord Millett's speech may produce difficulties in cases where the gist of the parties' intention is only known at a relatively high degree of generality; so that there are several forms of words that might properly be said to express the gist of their intention.  The diffiuculties arise because (in relation to cases where two or more materially different forms of words might be said to achieve the gist of what was agreed) Lord Millett did not identify any criteria by which to identify the form of words that should be inserted.  This problem arose for consideration in K.P.M.G. v Network Rail Infrastructure Ltd [2007] EWCA Civ 363 where (although unable to identify the common intention of the parties in the context of a claim for rectification) the court felt able to choose between two materially different forms of words as a matter of interpretation:  see [65]-[67]; sed quaere.