Contradictory terms in a contract - which would prevail?

Question

Suppose a lease agreement that was agreed and signed by both parties specifies the following:

Rent: £1,560.00 per calendar month (annual rent equals to eighteen thousand seven hundred and twenty pounds).

Payable: The first payment of £9,360.00p (inclusive of 6 months rent in advance) will be due on or before the signing of this agreement.

Further payments of £1,668.33 on the 29th Day of each month commencing May 2019 will be payable to the Landlord.

The tenant will not be due to pay the last two months’ rent of the tenancy, that is; November 2019 and December 2019.

One may note that 1668.33*4/6 is actually more than £2000 less in total than 1560 per month.

Which of these terms should prevail in interpreting this contract? And what would be the standing if seemingly neither of the parties noticed and rent simply got paid on a schedule of 9360+1560+1560+1560+1560+1560+1560? Would the tenant have overpaid by 2686.68 and be due a refund for this amount if such was pursued within the standard civil limitation period of 6 years? Why or why not?

I am tempted to recall that there is something within the unfair contract terms provisions which stipulates that in case of contradictory ambiguity, the conflict ought to be resolved in favour of the consumer when interpreting, and this conclusion would seem to be further supported by the fact that as one may expect, it was the landlord who had originally drafted/supplied the contract for both parties to sign.

Answer 1

I'm not hundred percent sure what the contract means - so if I'm correct, then this will be held against the person creating the contract.

My interpretation is that you safe about £3,000 if you stay for 12 months, by not paying for the last two months. On the other hand, if you decided to leave after 10 months, you pay a little bit more than £1560 per month. That's a reasonable interpretation of unclear terms that you could insist on. On the other hand, it may be exactly the interpretation that was intended.

Answer 2

Both

See Does how a court interpret a contract depend on whether it's a layman or expert who wrote the contract?

Contracts are to be interpreted, among other things, in the light of normal industry practice. Normal practice is that annual rents are payable monthly in advance - this contract is explicitly overriding that which is fine. It is also normal industry practice to give new commercial tenants a “rent holiday” - this usually occurs at the beginning of the lease to assist the tenant with moving costs but here the rent is front loaded and the holiday occurs at the end.

So, the month rent is £1,560. However, for the first year the tenant will pay £9,360 in advance and then, commencing on 29 May 2019, they will pay 4 monthly payments of £1,668.33. As you say, this is a saving of more than £2,000 on the first year’s rent. As previously mentioned, it is not uncommon for the tenant to be given a discount on the first year’s rent - this is that discount.

If the tenancy continues, the rent will be due on the 29th and be £1,560 subject to any adjustment clause in the lease. If such clause exists, it and possibly other clauses can refer to the “monthly rent” without having to worry about the first year modifications.

Answer 3

Contradictory terms in a contract - which would prevail?

The doctrine of contra proferentem provides that ambiguous terms are to be reasonably interpreted in favor of the party who did not draft the contract.

One may note that 1668.33*4/6 is actually more than £2000 less in total than 1560 per month.

There is a flaw in that rationale. It is unclear why you bring up the multiplier 4/6. The most important point to make is that the tenant is not saving any money.

The payment of £9,360.00 is due on January 29th, and that amount explicitly covers six months. This means that on May 29th, when the next payment is due, the landlord has earned four of those six months. The reason why the tenant will not have to pay on November 29th and December 29th is the hitherto unearned amount of £3,120.00 from the payment he made on January 29th.

Would the tenant have overpaid by 2686.68 and be due a refund for this amount if such was pursued within the standard civil limitation period of 6 years?

It depends on whether the lease explains why a monthly surcharge (i.e., the difference between £1668.33 and £1560.00) is applied from May 29th through October 29th, both inclusive.

The lack of such justification avails the tenant of the doctrine of contra proferentem. Accordingly, at the end of the lease the tenant will be entitled to a refund of the excess: 6 x ( £1668.33 - £1560.00) = £649.98.

Conversely, a justification in the lease regarding that surcharge would preempt an ambiguity and therewith the doctrine of contra proferentem. In that case, the tenant willfully agreed upon a surcharge about which he was informed via the lease.