Enterprise Inns Plc v Palmerston Associates Ltd & Anor

Contractual construction is a unitary exercise focused primarily on the language used, read with relevant background and commercial purpose. Clear language cannot be displaced by business common sense or contra proferentem. A definition referring to types of beer represented by brands in a price list operates by type. Once a listed type is represented by at least one relevant brand, all beers of that type fall within the tie. The same reasoning applies to cider and perry. Earlier contractual versions and regulatory material may be admissible background, but they are not necessarily decisive or helpful.

The claimant landlord sought declarations concerning beer-tie provisions in a 1989 lease, as varied by deeds in 1997 and 2001. The issue was whether “Specified Beers” and “Specified Ciders” meant products of a type listed in the contractual appendices and represented by at least one brand in the price list, or only brands or denominations appearing in that list.

The court tried the issue as a preliminary question. The parties relied on the contractual language, earlier lease documents, commercial purpose, European competition-law background and authorities concerning beer-supply agreements and contractual construction.

1. Construction. The preliminary issue was determined for the claimant. The relevant provisions were construed by a unitary exercise, considering their language together with relevant background circumstances and commercial purpose. The language was the most important consideration.
2. Meaning of the definitions. The appendices listed types of beer, not brands. The words concerning representation by brands in the Company’s Price List referred grammatically to the types of beer. A listed type became a Specified Beer when one or more brands of that type appeared in the price list. The purchasing obligation and restriction on competition therefore extended to all beer of that type, not merely to listed brands. The same construction applied to Specified Ciders, with perry treated as a type of cider for the contractual purposes.
3. Other provisions. The power to add, substitute or delete brands was consistent with a type-based construction because adding a brand could bring a previously unrepresented type within the definition. Unspecified Beers and Unspecified Ciders existed where no brand of the relevant type appeared in the price list. Paragraph 8 required supply only of beers given a price in the price list.
4. Background and authorities. Earlier lease documents were admissible as potential background but provided no real assistance. The regulatory background was admissible in principle, although it gave mixed signals and was not helpful. The court was not bound by unargued observations in Unique Pub Properties v Beer Barrels & Minerals (Wales) Ltd [2004] EWCA Civ 585. Both rival constructions were commercially intelligible, so business common sense did not decide the issue. The clear language also made contra proferentem unnecessary.
5. The preliminary issue was answered in accordance with the claimant’s interpretation.