First Principles of Business Law

2.1. Interpreting the terms of a contract

2.5. The relevance of post-contractual conduct

On the same facts again, consider another argument raised by B.

A, an architect, leases office space in B's building for three years. One clause in the lease says: 'At any time during the lease, B will, at his own cost, carry out any interior alterations that are reasonably necessary for the conduct of A's business'. Another clause gives either party the right to terminate the lease by giving six months notice. After a year, A gives B notice that he is terminating the lease in six months time. A also asks B to install extra office partitions in the leased offices because he has now employed more staff.

B argues that to interpret what the agreed terms mean, the court can properly take account of how the parties behaved after the contract was made. Is B right?

(a) Yes, what the parties have actually done after the contract was made can properly be taken into account to decide what the terms of the contract mean.

(b) No, what the parties have actually done after the contract was made cannot properly be taken into account to decide what the terms of the contract mean.