Identifying and resolving inconsistency
In its recent judgment of Alexander v West Bromwich Mortgage Company Ltd  EWCA Civ 496 the Court of Appeal has given helpful guidance as to the correct approach to assessing whether there is an inconsistency of terms within a contract.
The decision emphasises that there should be no rush to classify clauses as inconsistent with each other . To amount to an inconsistency, a term must actually contradict or be in conflict with another term – it is not enough for one term to qualify or modify another term . Inconsistency can also include cases where the clauses in question cannot “fairly or sensibly” be read together, having regard to “considerations of reasonableness and business common sense” . In assessing whether clauses can “fairly or sensibly” be read together the court endorsed the approach of putting the two clauses together to see what sense, if any, can be made of them as a single clause . Inconsistency may also be found where a standard or ‘boilerplate’ term would defeat the main purpose or object of the contract .
It was for these reasons that the Court of Appeal held that a mortgage offer containing a statement that the rate paid by the customer would be the Bank of England Base Rate plus 1.99% was inconsistent with a standard term contained in supporting documents that purported to give the lender a widely framed right to vary the mortgage rate at will . Where there was an inconsistency the contract provided that the terms of the offer prevailed over the standard terms. In this case the offer and standard terms could not reasonably be read together and the offer document therefore took precedence .
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