INTERPRETATION

Question 1

What is contract interpretation?

Answer 1

During the course of interpretation, the court will determine the meaning of a contract

Courts will usually consider the

• terms
• intent: AND
• purpose of the contract

Question 2

What are the types of terms that need interpretation in a contract?

Answer 2

1. indefinite
2. ambiguous
3. omitted

Question 3

What are the standards of preference when interpreting a contract?

Answer 3

1. Courts prefer to give reasonable, lawful and effective meanings to the terms
2. courts give more weight to specific or exact terms
3. greater weight to negotiated or added terms
4. courts will determine against the drafter when choosing among reasonable meanings -

Question 4

How does the court treat indefinite terms in a contract?

Answer 4

Indefinite terms - left open

• if indefinite terms are essential, court may void
• if indefinite terms are minor, court may add a definite term based on what is customary

Question 5

How does the court treat ambiguous terms in a contract?

Answer 5

ambiguous - multiple meanings or involve a misunderstanding between the parties

if both parties have the same meaning, the court will interpret the contract under that meaning

• if parties have different meanings, court may void contract for lack of mutual assent

Question 6

How does the court treat omitted terms in a contract?

Answer 6

Omitted - parties haven’t decided what should happen in a given situation

• courts will fill in the blanks using reasonable terms under the circumstances
• parties must act in good faith in the performance and enforcement