5. The express excludes the implied (expressio unius rule)

The maxim expressio unius est exclusio alterius or expressum facit cessare tacitum translates as "express mention of one thing excludes another" (Netherlands Ins Co v Ljunberg [1986] 3 All ER 767). It follows that, if a contract deals expressly with a point, the courts are less likely to interpret another clause as supplementing that express provision. Where one or more particular items are listed in a clause without any general description, the specific identification of those instances is generally presumed to exclude from the scope of the clause similar but distinct items. The argument operates as a principle of language, rather than a rule or presumption of law.

6. General words at the end of a list (the ejusdem generis rule)

Where a general phrase (or "sweeping up" sub-clause) follows specific enumerations in a contract clause, the phrase will generally be interpreted as limited to other examples of the same type or genus (Chandris v Isbrandtsen-Moller Co Inc [1951] 1 KB 240). (Eiusdem generis means "of the same type".) Again, the principle operates more as a prima facie rule of language, rather than a rule or presumption of law.

7. Section 61 Law of Property Act 1925 presumptions

Section 61 of the Law of Property Act 1925 lays down presumptions for interpreting contracts, not limited to transactions concerning property. It applies to "all deeds, contracts, wills, orders and other instruments" coming into operation on or after 1 January 1926. The following presumptions operate "unless the context otherwise requires":

• Persons to include legal persons. "Person" includes a corporation (section 61(b)).

• Singular and plural. The singular includes the plural, and vice versa (section 61(c)).

• Masculine and feminine. The masculine embraces the feminine, and vice versa (section 61(d)).

• Month means a calendar month. The word "month" in any deed, contract or other instrument means a calendar month, not a lunar month. (section 61(a)). Section 10(3) of the Sale of Goods Act 1979 makes the same provision for contracts for the sale of goods.

C. Relevant and admissible background

Courts will look at the surrounding circumstances

The text of the contractual document is the starting point, but the wider context is admissible. The reasonable businessperson reads the text equipped with the background information (legal, regulatory, and factual) reasonably available to the parties when the contract was made. This is again an objective test; background known or reasonably available only to one party is not relevant or admissible.

The leading case of Investors Compensation Scheme adopted a broad test for admissible background, embracing "all the background knowledge" and "absolutely anything". This has been qualified by the requirement that the material must be relevant (Absalom v TRCU Ltd [2005] EWHC 1090 (Comm)). So, for example, the background includes "knowledge of the genesis of the transaction, the background, the context, the market in which the parties are operating" (The Diana Prosperity).

The admissible background can be considered in every case. There is no "plain meaning rule" in English law, which would make it necessary to establish that the language of the contract is ambiguous before having regard to the background (Westminster City Council v National Asylum Support Services [2002] UKHL 38).

However, there is a limit on the admissible background when interpreting contracts addressed to a wider audience than their original parties . An example is a company’s articles of association. According to Lord Hoffmann,

“Because the articles are required to be registered, addressed to anyone who wishes to inspect them, the admissible background for the purposes of construction must be limited to what any reader would reasonably be supposed to know. It cannot include extrinsic facts which were known only to some of the people involved in the formation of the company.” (Attorney General of Belize v Belize Telecom Ltd [2009] UKPC 10)

Other examples are:

• A registered charge over land (Cherry Tree Investments v Landmain [2012] EWCA Civ 736).

• A bill of lading (The "Starsin" [2003] UKHL 12)

In the Commercial Court, the parties should identify the relevant factual matrix both in statements of case and in the List of Issues (Commercial Court Guide (9th edition, updated 2014) paragraphs C1.2(h) and D6.1).

Market practice - evidence needed

Parties sometimes argue that, though their contract wording may be cryptic, everyone in the market knows what it means. This is a valid argument, if supported by evidence of market practice (Crema v Cenkos Securities Plc [2010] EWCA Civ 1444). In practice, it is often hard to produce consistent evidence of market practice.

Limited relevance of negotiations

The parties' prior negotiations, including earlier drafts of the contract and correspondence evidencing negotiating stances, are not relevant to interpretation (Chartbrook v Persimmon). (They are admissible where rectification is pleaded.)

However, a party may prove relevant background information, available to both parties, by evidence that it was mentioned in negotiations (Oceanbulk Shipping & Trading SA v TMT Asia Ltd [2010] UKSC 44).

The negotiations may also be admissible to prove the commercial purpose of the transaction. However, care must be taken. Statements made in negotiations may only reflect one party's purpose, or may even contradict an express provision of the resulting contract (Scottish Widows Fund and Life Assurance Society v BGC International [2012] EWCA Civ 607).

Deleted text (whether visible in the contract or deleted from a previous draft) may be admissible to resolve ambiguity if it proves what the parties agreed was not in their contract. But it should be treated with care (Narandas-Girdhar v Bradstock [2016] EWCA Civ 88).

The safest way to ensure that background information will be admissible in a dispute is to set it out in the Background section of the contract (also known as the recitals).

Events after the contract was made are not relevant

The reasonably available background is limited to objective facts and circumstances up to and including the date of the contract:

"Under English law, a contract has a meaning which is to be ascertained at the time when it is concluded, having regard to its background and the surrounding circumstances within the parties' knowledge at that time." (Lexington Insurance Co v AGF Insurance Ltd [2009] UKHL 40 at paragraph 45.)

Subsequent statements or conduct (including mode of performance) are inadmissible for the purpose of interpretation (Wickman Machine Tool Sales Ltd v L Schuler AG [1974] AC 235 (HL)).

(Such evidence is admissible to prove a subsequent variation by conduct, or estoppel by convention.)