CASE 1: JEWELLERS KING

‘Premier’ is the owner of numerous retail units in a local shopping centre. At present, it leases two units to two jewellers. It decides to lease a third unit for 15 years to ‘Jewellers King’, a company also operating a retail jewellery sales business. Clause 12(d) of the lease contract with Jewellers King provides: ‘With regard to any of its retail units, Premier shall not lease any such unit – other than Jewellers King's unit and two other units only – for a use entailing the retail sale of jewellery.’ Within 19 months of entering into the lease contract, Premier grants a lease of one of its other retail units to a fourth jeweller. Jewellers King is infuriated. It argues that Clause 12(d) prohibits Premier from granting another lease at the shopping centre to a jeweller. Premier is surprised. It argues that the phrase ‘two other units only’ refers to two units in addition to the three units that it is already leasing to Jewellers King and the two other jewellers. In effect, it concludes, under Clause 12(d) it is therefore permitted to let up to a total of five jewellery retail units. Jewellers King disagrees. It argues that the phrase ‘two other units only’ is a reference to the two units that were already let to jewellers. Hence, since Jewellers King was the third jeweller to lease one of Premier's retail units, the total number of three jewellery retail units had been reached. Premier was thus prohibited from leasing any more retail units to other jewellers. Premier stands firm. In order to support its reading of Clause 12(d), it refers to the fift hrecital of the preamble of the lease contract, which reads: ‘Whereas Premier intends to let no more than a total of five units at the shopping centre for the purposes of the retail sale of jewellery’. Therefore, Premier argues, Clause 12(d) cannot be interpreted as having the effect that it is in breach of the lease contract by letting a fourth retail unit to a jeweller.

• 1 [Preamble] Assume that the language of Clause 12(d) is ambiguous. What role, if any, may the preamble play in corroborating Premier‘s interpretation of Clause 12(d)? Would it make a difference if it involved not a preamble but another Clause in the contract?