Textbook Notes (363,063)
Canada (158,170)
Business (2,364)
BU231 (315)
Valerie Irie (149)
Chapter 10

Chapter 10 BU231.docx

3 Pages
Unlock Document

Wilfrid Laurier University
Valerie Irie

BU231 Chapter 10 – The Interpretation of Contracts The Relationship Between Formation and Interpretation of Contracts -Construing – interpreting -Most of the time parties do not have conflicting interpretations because they have understood each other well enough to complete their bargain without dispute -However, disagreements about interpretation of contracts are a common risk in business arrangements The Interpretation of Express Terms Two Approaches to Interpretation -Strict or plain meaning approach – an approach that restricts interpretation to the ordinary or dictionary meaning of a word -Liberal approach – an approach that looks to the intent of the parties and surrounding circumstances, and tends to minimize, but does not ignore, the importance of the words actually used How the Courts Apply the Approaches -Rather than choosing between them, a court will apply both approaches and choose the best meaning for the circumstances How the Courts Choose Between Conflicting Testimony -Often parties to a contract give conflicting evidence about the circumstances surrounding its formation -In order to decide which testimony to accept, the court will seek corroboration of one of their versions, if possible, from a non-party or from the actions of the parties in relation to the contract -It decides which story seems more reasonable Special Usage of Words -To interpret the express terms of a contract, the court begins with the dictionary definition of the words used, and then examines their meaning in the context of this contract, these parties, and the surrounding circumstances -Another important element is evidence of special usage of words, particularly in regards to trades and to areas of the country -Evidence of special usage is not necessarily conclusive: a court may decide that the word was used in a general rather than a special way, perhas the user of the word was aware that the other party was not familiar with the trade usage Special Types of Contracts -Some types of contracts require special interpretation -Contra proferentem – a rule of contract interpretation that prefers the interpretation of a clause that is least favourable to the party that drafted the clause -Exemption clause – a clause in a contract that exempts a party from liability Predicting the Likely Decision of a Court -The business person’s closest, if imperfect, substitute for this legendary figure must be her lawyer, who can offer insight during drafting of the contract and when an interpretation dispute arises BU231 Chapter 10 – The Interpretation of Contracts The Goal of the Courts: to Give Validity to Contracts -The courts lean towards keeping an agreement alive rather than brushing it aside as not binding -When possible, courts give ambiguous words a meaning that makes a contract enforceable The Parol Evidence Rule The Meaning of the Rule -A rule preventing a party to a written contract from later using parol evidence to add to, subtract from, or modify the final written contract -The rule applied both to an oral agreement that has been reduced to writing and to a written agree
More Less

Related notes for BU231

Log In


Don't have an account?

Join OneClass

Access over 10 million pages of study
documents for 1.3 million courses.

Sign up

Join to view


By registering, I agree to the Terms and Privacy Policies
Already have an account?
Just a few more details

So we can recommend you notes for your school.

Reset Password

Please enter below the email address you registered with and we will send you a link to reset your password.

Add your courses

Get notes from the top students in your class.