Chapter 9 - Interpretation Of Contracts Flashcards
Content of the contract
Contracts will have to be interpreted when there is uncertainty or conflict regarding the content of the contract.
Determining contracts
Written and signed
Written but unsigned
Orally or tacit
Written and signed
- content is generally determined from the document
- signatory is bound by the ordinary meaning and effect of the words appearing over signature
- signature signifies assent to the document
- defended for written and signed documents are
- fraud
- illegality
- duress
- undue influence
- mistake
Written but unsigned
OTHER EVIDENCE would need to be used to determined of document is a true reflection of contractual terms.
- these are referred to as “TICKET CASES”
- these are often used by bus services, airlines and theatres
- includes a notice on a website
- the use of a website or placing of an order would be subject to standard contract of website
- this does not include “clickwrap” agreements which is widely used and non specific.
Orally or tacit
Consent is established by looking at the parties words and behaviors
Principles of Interpretation
In principle there is NO difference between contracts which are concluded verbally, in writing or by conduct.
ie
** the validity of a contract is not affected by the manner of its creation.
> > > Most important principle of interpretation is the determination of a parties’ intention «<
5 Guidelines of interpretation
1 - Parties use word in their ordinary grammatical meaning.
2 - The context in which the words are used, contract as a whole and surrounding circumstances are taken into account.
3 - If words are uncertain or AMBIGUOUS the courts may interpret against the party to drafted the contract.
4 - The law presumes that:
- The parties intend their contract to be valid and enforceable - The parties do not intend to deviate from Common Law, unless expressly stated.
5 - When a contract is reduced to writing the Parole evidence rule applies.
Interpretive principles for Ticket Cases
A supplier may assume consent where:
- the customer reads and understands the document and his conduct indicates that the terms accepted.
- it’s impossible to prove that the customer read the document, but the supplier took all necessary steps to alert the customer of terms, thereafter the customers conduct indicates acceptance of the terms.
Parole Evidence / Integration Rile
Applies to all written contracts.
The style states that only the written record of the agreement is the document itself and this must be interpreted.
The effect of the rule:
*** A contracting party may not submit evidence of other agreements reached before or simultaneously with the conclusion of the written contract in dispute, which contradicts, alters or adds to the terms of the agreement.
——- Exception to the rule
> if one enters into a CONSUMER contract, evidence outside the agreement may be taken into account in interpreting the T & C’s
The parole evidence rule does not apply when
There is an agreement concluded after the one in dispute - even if it alters, varies or contradicts the one in dispute.
There is an agreement before the one in dispute and does not alter, contradict or vary the one in dispute.
The contract is void or voidable.
Principles of interpretation
- Rectification
If there is an error made when the contract is reduced to writing, then the parole evidence rule would not allow the parties to bring evidence that conflicts with the terms of the contract.
Then the law allows for rectification provided that the parties can prove
- their true intention
- The the written agreement does not reflect this.
// Rectification cannot rectify failure to comply with statue’s requirements.
Rectification cannot be used to supplement defective consensus.
One exception to signing of a will
If the will is unsigned, application can be made to the court for the will to be validated if the Testator gave instruction for the will to be drafted, but passed away before he could sign it.
NB
Ratification
Rectification
Restitution
Ratification
** To give consent to an act that has already been done.
Example: a principle can choose to ratify a contract that was signed by an agent beyond specified authority of the agent to conclude.
Rectification
** Court order to alter or amend the terms of an instrument, to correct a mistake, to express the true intention of the involved parties which was not expressed in the original version in the interest of fairness and justice.
Restitution
** to restore a situation as before.
In law of contract, if a contract is void, all parties must return whatever they have received through the contract.
