Ch 8: Interpreting and Drafting Contracts

Question 1

Name 3 of the key principle interpretations

Answer 1

1. give effect to the objective intention of the parties
2.  apply the canons of contract construction
3.  if necessary, consider additional evidence

The court should not rewrite the contract for the parties, but rather interpret the contract the parties made

Question 2

Interpretation: The Intention of the Parties

What is the intention of the courts?

Answer 2

Courts aim to give effect to the intention of the parties and establish the objective intention of the parties by reviewing the terms of the contract

Question 3

Objective intention:

Answer 3

what reasonable parties would have intended by agreeing to the specified terms; what the parties subjectively intended is not relevant

Question 4

Canons of Construction are not rules of law but fundamental guiding principles.

Name 5 of the canons

Answer 4

1. Plain and ordinary meaning: the “golden rule”
2.  Special meaning: if the context requires it
3.  Reading the contract as a whole
4.  Giving effect to all parts of the contract: don’t read one part in a way that makes another part redundant
5. Restriction by express provisions: special
   conditions trump general provisions
6.  Commercial purpose: presume the parties did not intend a commercially unreasonable result
7.  Context: read the words in context
8.  Contra proferentem: construe ambiguous provisions against the party that/who drafted the contract

Question 5

A contract is considered the _______ Piece of evidence

Answer 5

primary

• Where the contract is ambiguous, subsequent conduct of the parties may be considered

Question 6

Parol evidence rule:

Answer 6

where the contract is clear and unambiguous, extrinsic evidence of the parties intentions will not be considered.

• The parol evidence rule does not preclude evidence of the factual matrix, i.e., background

Question 7

Name 3 purposes of drafting a contract

Answer 7

1. Reflect the business arrangement between the
   parties
2. Clearly allocate risk between the parties to minimize the likelihood of disputes
3. Provide protections and incentives for the parties

The draftor should
• Carefully consider the fundamental elements
• Consider “what if” scenarios