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Lecture

Chapter11ReadingNotes.doc

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Department
Business
Course
BU231
Professor
Daniel J Fife
Semester
Spring

Description
1READING NOTESChapter 11 The Interpretation of ContractsParties may disagree about the meaning of a contract once its formed We now discuss the nature of these disagreements and how they are resolvedRelationship Between Formation and Interpretation of ContractsWhen two sides disagree they can either realize that the original terms were too ambiguous for acceptance and thus void or concede different meaningsIn construing we are not dealing with fraud or deceit each party believes their interpretation of the contract is correct and the other party is wrongInterpretation of Express TermsTwo Approaches to InterpretationoStrictPlainMeaning ApproachRestricts interpretation to the ordinary or dictionary meaning of a word words can still have many different definitionsoLiberal ApproachLooks to the purposes of the parties in drafting their agreement what did they intendStresses circumstances surrounding the contract as well as negotiations knowledge of each partyHow the Courts Apply the ApproachesoEg Does build imply supplying the materialsoTo build literally means to construct but in many circumstances it may include the supply of materialsoSince there is an ambiguity the court will look outside the contract to surrounding circumstancesHear evidence of previous transactions between the parties investigate whether materials were previously suppliedEven look to whether there is evidence of discussing the cost of materials during negotiationsHow Courts Choose Between Conflicting TestimoniesoCourt is reluctant to accept direct testimony of one party rather than the other it will seek a corroboration from a third party most oftenoAs a last resort a court will choose between versions basing its decision on the credibility of the parties themselves which story seems more reasonableSpecial Usage of WordsoAnother important element is special usage of words in particular trades and in particular areas of the countryie Build means strictly labour in carpentry in OntariooEvidence of special usage is not necessarily conclusive a court may decide that a word was used in its general manner not specialContra Preferentum
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