Chapter 17.

1
The Interpretation of
the Contract
 The form of contracts

Deeds Simple Contracts

In the form
of a deed Wholly Partly oral and Oral
written partly written
Proof of contents of a contract
The production
Deeds of the deed

Terms of contracts in writing are

proved by the written document

Simple Contracts partly in writing and

Contracts partly oral by written document
and oral evidence

Terms of oral contracts by oral

evidence
Written contracts the
Parol evidence rule
 Parol evidence cannot be
admitted to vary or contradict a
deed or other written instrument.

Jacobs v. Batavia & General Plantation Trust [1924] 1 Ch 287, 295

True exceptions to the parol evidence rule

1. Where the whole contract is not in fact in writing.

2. Where the contract is not an accurate record of
the agreement which the parties had already
made.
3. Where the contract is void or voidable - to show
this, oral evidence of fraud, duress etc. may be
led.
 True exceptions to the parol evidence rule
(continued)

4. Where the contract was subject to a condition

precedent.
5. To show that the contract has been discharged
or some of its obligations waived.
6. To prove a collateral contract.
Parol evidence as an aid to interpretation

To explain a latent (hidden) ambiguity.

To explain a usage or custom of the trade.

Interpreting the contract
- The rules of
construction
The rules for construing a contract

1. The plain meaning rule where it is clear that the

meaning of the words is the meaning to be given.
2. The whole tenor of the document can be used to
determine the meaning of particular words or
phrases.
3. Obvious mistakes in spelling or grammar will be
corrected or ignored.
4. The eiusdem generis rule applies to the
interpretation of contracts.
The rules for construing a contract
(continued)

5. Where possible ambiguous or doubtful words will be

interpreted to support the contract rather than to
invalidate it.
6. Where words can have two meanings the courts will
give the meaning least favorable to the party who
drew up the contract (contra proferentum).
7. Time in commercial contracts stipulations as to time
are treated as being of the essence of the contract .
Implied Terms
When can the courts imply terms in contract?

Terms may be implied:

By custom.

By statute.

To give business efficacy to the contract.