interpretation Flashcards
(14 cards)
What is freedom of contract?
When contract parties enter into a contract, they can insert any provision or terms into the contract as they wish. There are no controls on what they can put into their contract.
What are express terms?
The provisions or clauses that the parties have agreed with each other. They don’t need to be in writing; they could be oral.
How are express terms agreed?
They have to be explicitly agreed upon by the parties with each other.
What is the role of courts regarding express terms?
The courts will sometimes imply a term into a contract, adding to it rather than telling the parties what they agreed.
What is the difference between interpretation and rectification?
Interpretation is about understanding the contract as it stands, while rectification is done when there is an error in the contract that both parties agree on.
What is the literal approach to contract interpretation?
It focuses on the plain, natural, and ordinary meaning of each word, ignoring external material.
What is contextual interpretation?
An approach where the court looks at all external material, including what the parties said to each other and how they behaved.
What did Lord Hoffman state about contextual interpretation?
Words cannot be understood outside their context, and interpretation involves understanding the meaning to a reasonable person with all background information.
What is commercial common sense in contract interpretation?
It requires avoiding absurd results from a commercial perspective, preferring meanings that align with business common sense.
What is the significance of the case Rainy Sky SA v Kookmin Bank?
It established that when parties use ambiguous language, the court must imply the meaning that aligns with business common sense.
What happens if both contracting parties attribute a special meaning to a phrase?
The court assesses the intentions objectively, determining the contract’s subject matter based on the common understanding.
What types of evidence are not admissible in contract interpretation?
Statements of individual subjective intention, pre-contractual statements, and post-contractual conduct are not admissible.
What is ex proprio motu?
It refers to actions taken by a party by itself, without prompting from the other party.
What is the relevance of negotiations in contract interpretation?
If one party makes known its understanding of a phrase and the other party does not object, that meaning is the one to be used.
