Herbots, Jacques H. --- "Interpretation of Contracts" [2006] ELECD 181; in Smits, M. Jan (ed), "Elgar Encyclopedia of Comparative Law" (Edward Elgar Publishing, 2006)

Book Title: Elgar Encyclopedia of Comparative Law

Editor(s): Smits, M. Jan

Publisher: Edward Elgar Publishing

ISBN (hard cover): 9781845420130

Section: Chapter 30

Section Title: Interpretation of Contracts

Author(s): Herbots, Jacques H.

Number of pages: 23

Extract:

30 Interpretation of contracts
Jacques H. Herbots


1 What precisely is interpretation?
Like dreams and artistic creations, legal texts may need interpretation. Not
for the same reasons, however, the difference being that a legal text, such as
a statute or a will, by the use of words intends to express the will of the
author of the text. The text may need clarification of its meaning. In this
sense interpretation of a contract can be defined as the determination of the
meaning that must be attached to the declarations made by the contracting
parties and of the legal effects created by these declarations. One of the most
important topics in the law of contract is indeed that concerned with how
to establish the effects of the contract; in other words what, in case of
dispute, is or is not an obligation according to the contract. The function of
the contract is to be a legal form for autonomous regulation. What the
parties have decided themselves in the contract is decisive within the frame
of freedom of contract. But parties often make an unclear or incomplete
contract, and they often have divergent opinions as to what it means.
Contracts, like other linguistic expressions, suffer from the problem of
unclear meaning. The term `interpretation' ­ the term `construction' is often
used as a synonym ­ refers to the process by which a court gives meaning to
contractual language when the parties attach materially different meanings
to that language. The American Restatement (Second) of Contracts ...