In resolving the question whether a guarantee was a call guarantee or a conditional guarantee the Supreme Court of Appeal in Mutual & Federal v KNS Construction restated what has been said before about interpreting documents.
The interpretative process is one of ascertaining the intention of the parties – what they meant to achieve. And in doing that, the court must consider the circumstances surrounding the contract to determine what their intention was in concluding it.
The court should always consider the factual matrix in which the contract is concluded as well as the text to determine the parties’ intention.
For the outcome of this case read our post on why a conditional performance guarantee is akin to a suretyship.