The bulk of this study comprises an examination of arbitration decisions related to issues of interpretation of long-term commercial contracts. The focus is upon two particular problems of interpretation: the extent to which material extrinsic to the written contract can influence interpretation of the contract, and how the terms should be interpreted in the light of changing circumstances.

A particular theoretical hypothesis suggests this choice. Drawing primarily upon the work of Ian MacNeil, the author seeks to test the proposition that the traditional or classical rules of contract law fail to analyse coherently long-term “relational contracts”. In particular, in these relational contracts it makes little sense for the courts to insist upon strict performance of the literal meaning of the terms of the contract, because this formalistic regard for sanctity of contract misunderstands what are necessarily rather open-ended, diffuse, co-operative types of obligations undertaken in long-term business contracts. Relational contract theory suggests that the courts should instead interpret the contract in the context of the economic relation between the parties as a whole, with a view towards