Interpretation of Contracts

Interpretation involves an ascertainment of the meaning of the words and provisions of a contract. Whereas "construction" of a contract relates to the legal effect of the words used by the parties, "interpretation" addresses the meaning of the parties. Whose meaning is to be given effect with respect to certain contract terms? What evidence may be taken into account when courts engage in interpretation? In this lesson, the parol evidence rule will be considered with respect to the admissibility of extrinsic evidence to determine the meaning of the contract as formed.

Learning Outcomes

On completion of the lesson, the student will be able to:

1. Describe the different tests courts use to determine whether to admit evidence of interpretation.
2. Explain the difference between objective and subjective meanings.