In order to clarify how to define the interpretation of the contract beyond the “normal” meaning of the words, Lord Hoffman established in Investors Compensation Scheme Ltd v West Bromwich Building Society  1 W.L.R. 896, 912 that an objective test should be applied. Disputes over the correct interpretation of EPC contracts will always be difficult to resolve – EPC contracts are complex and can be lengthy. The projects are quality and complex. In recent years, the general trend has shifted from an excessively literal approach to treaty interpretation to what has been known as a “targeted” approach. Simultaneous documents: A document executed simultaneously with or shortly after a contract can be used for interpretation as long as it is part of the same transaction, as this gives a more complete picture of the transaction. Of course, the more attention the treaty is given before it is formally adopted, the less unforeseen consequences there are. Generally speaking, it is inevitable to conclude that a written contract will avoid a large number of problems. Writing an agreement isn`t always useful or practical, but it can probably be done more often than it is.
Almost fifty years ago – and this is still true – a law professor who dealt with business management found that the relevant context for the interpretation of the contract was therefore defined below. An interpretation of the contract may be necessary in the event of a dispute relating to the contractual conditions, language and definitions used in a contract. Contract interpretation is important for construction disputes.