Session 7 Flashcards
What is interpretation?
process of establishing one single binding meaning to the explicit words in a contract
Subjective and objective approach to interpretation?
Subjective approach - the reasons behind the contract -Civil law systems
Objective approach - expression theory - the literate words of the contract - Common law
What is falsa demonstratio and rectification
Falsa demostratio - a wrong description does not harm - common mistake does not make the contract void
Rectification - common law - the intention prevails but if there is a common mistake - rectification of the contract and edit it
in truly ambiguous contracts what is done?
- General solution – look at the intentions and wordings, then carry out the reasonable test - what a reasonable person would infer. Then later the circumstances (soft law): negotiations, the position of each party and their knowledge, good faith). However, in ENG –> pre contractual negotiations and post contractual behavior is not VALID
Unambiguous clauses? Under GER, FR, AND ENGLAND
- FR - if the clause is clear and precise no need to interpret
GER - if it is business content based on customary businesses - then it is correct and complete. Different content - may be interpreted-
ENG - ordinary meaning interpretation
in civil law if the clause is missing in the contracts but was discussed ….
the evidence is relevant
what is the PAROL EVIDENCE?
in common law, the prior negotiations are not evidence, as negotiations often carry out the expectations of one side
Maxims of interpretation?
some legal systems provide rules to interpret the contract - analyzing contracts as a whole, the original language prevails.
Contra Proferentem Rule?
if a clause is ambiguous, it will always be interpreted against the interests of the party that drafted it. in the EU this is applied on commercial law and in India and Californian law, in every aspect
