When it comes to commercial contracts, clarity is not just a virtue; it’s a necessity. Whether the document relates to the day-to-day running of a business (such as T’s & C’s or a website privacy policy) or a corporate transaction (such as a share purchase or investment agreement), the use of clear, express provisions on key items matter. It can mean the difference between a smooth business relationship and a costly dispute. What is an express term? In simple terms, under English law, these are contractual provisions that are specifically stated and defined within an agreement. They are to be differentiated from “implied terms”, which arise outside of the agreement but are incorporated, typically by law, conduct or custom. This can include legislation (such as consumer credit protections) or how the parties have previously dealt with each other. In broad terms, whilst implied terms restrict contractual freedom, they serve to fill in the blanks if express terms are deficient, poorly drafted or out of line with overarching legal principles. As such they can represent the unknown to the unwary. Why does clarity matter in commercial contracts? Precision with express terms (including an understanding of what may be implied by law) is important for the following reasons: Legal certainty and predictability – Parties should come to terms in a manner whereby their understanding of the contract is the same and should be able to appreciate their own rights and obligations without needing to resort to judicial interpretation. Predictable outcomes also stabilise the operation of the business and the confidence third parties (customers, lenders, buyers etc.) have in it. Risk mitigation and dispute avoidance – Unclear contract terms are fertile ground for disputes. If parties interpret provisions differently (or they are poorly drafted), the risk of dispute increases, which can result in expensive and time-consuming litigation or arbitration. Enforceability – Courts strive to give effect to the parties’ intentions. However, where terms are ambiguous or incomplete, courts might introduce implied terms (as mentioned above) to give the contract efficacy or interpret provisions in ways that neither party initially anticipated. What clauses commonly cause disputes? One example of how things can go wrong are clauses that involve calculations (e.g., pricing formulas, penalties, or profit-sharing arrangements). Contractual language that clearly and economically expresses calculation methodologies can be challenging to get right, but can be an important exercise to ensure that (seemingly) well understood concepts are in fact agreed. We also recommend providing an example of the calculation within the contract. This not only assists with the parties’ understanding at the time the contract is signed but can also be a powerful tool if there is any issue of how the words describing the arithmetic should be interpreted. Clauses that relate to agreeing “future matters” or serving “notices” are also highly litigated provisions in commercial contracts. Unstated time periods, ambiguous triggers, or a lack of procedure being common issues. Take for example: “either party may terminate with reasonable notice”. When? How? Using what process? What is “reasonable”? A cautionary tale when drafting express clauses Earlier this summer, the case of Inspired Education Online Ltd v Crombie [2025] EWHC 1236 (Ch) illustrated the importance of clarity and interpretation when drafting express clauses. In 2022, Inspired Education Online Ltd (Inspired) acquired the entire shareholding in My Online Schooling Ltd, from Mr. Crombie, pursuant to a share purchase agreement (SPA). There was a mechanism within the SPA, by which Mr. Crombie was able to dispute the completion accounts, which he subsequently did… by email. The process for the manner and timing for serving notices under the SPA is typically tightly controlled in legal documents. For example, if email is permitted, the address will often be that of a carefully selected individual. Mr. Crombie sent his email to a different address than the one specified. Not unreasonably, Inspired argued that Mr. Crombie’s email was not valid. The Court rejected Inspired’s argument, as the procedure relating to agreeing/disputing completion accounts in the SPA referred to the need for Mr. Crombie to “notify” the Buyer in writing. The Court was of the view that if the parties had meant for the procedure to comply with the “Notice” clause within the SPA, the word ‘notice’ would have been used accordingly. Differentiation of meaning based on such similar words may, at first glance, seem like pedantry but this is a real-life example, illustrating the importance of careful drafting. The word “notifying” has an ordinary meaning, whilst “Notice” was an agreed concept with applicable rules. The outcome also serves as a warning regarding the use of AI, as this nuance may not have been something that an AI generated document would necessarily have picked up. For businesses, the benefits of ensuring clear express provisions are evident: reduced legal exposure, greater operational certainty and stronger negotiating positions. How can Morr & Co help with queries around express clauses? If you have any questions or would like any further information on express clauses, please do not hesitate to contact our Corporate and Commercial law team on 0333 038 9100 or email info@morrlaw.com and a member of our expert team will get back to you. Disclaimer Although correct at the time of publication, the contents of this newsletter/blog are intended for general information purposes only and shall not be deemed to be, or constitute, legal advice. We cannot accept responsibility for any loss as a result of acts or omissions taken in respect of this article. Please contact us for the latest legal position. Authored by Rebekah Sutcliffe Solicitor Message Tags Insights Corporate Insights On this page Contact our team today to find out more get in touch
