Flash Cards - Interpretation

Question 1

In the Pacific Gas case, the clause at issue states that the defendant agrees to perform the work at its own risk and expense and to indemnify plaintiff against all loss…resulting from injury to property…” Did the court find that PE could be entered to interpret the meaning of the words “injury to property?”

Answer 1

Court, Judge Traynor, says that the meaning of this provision is really only understandable in context. On that basis, it allows the PE.

Question 2

in Pacific Gas, Traynor allows PE to establish the meaning of the phrase “injury to property.” What test does Traynor establish?

Answer 2

Extrinsic evidence should be considered only when the contract language is “reasonably susceptible” to the interpretation offered. The parties view can trump trade usage, and objective interpretations

Question 3

What is the key rationale from Pacific Gas?

Answer 3

The goal of contract interpretation is to effectuate the intention of the parties, which may not be clear from the text.

Question 4

Posner’s opinion in Confold Pacific would allow more or less extrinsic evidence into the contract to rectify interpretation problems?

Answer 4

Less, but Posner does not create a bright line rule

Question 5

The hierarchy of contract interpretation includes three steps. What are they?

Answer 5

(1) Is the language of the contract plain and unambiguous? If not, (2) does consulting external sources on parties intent clear it up? If not still, (3) then use the appropriate gap fillers.

Question 6

True or False. When the language in the contract is clear and unambiguous, there is no room for interpretation or construction

Answer 6

Under Pacific Gas, False. Under Confold, Probably False, but its unclear