Text 7 How to Interpret Written Contracts

Even when the parties put their contract in writing, something in the contract may not be quite clear or may require interpretation. This is frequently the case when standardized, printed order blanks are used. It also occurs when printed contract forms with blank spaces are used. In the completion of the forms, some contradictory terms may be added. Moreover, words do not always have the same meaning to different persons. One person may use a term that seems perfectly clear but which may mean something quite different to another party.

Annually, in millions of transactions, consumers buy, borrow, and lease goods and services. Usually the consumers are asked to accept and sign a printed form that is a contract of adhesion. These are contracts, such as credit purchases and life insurance policies, prepared by the stronger party with the help of their lawyers to favour their own interests. Generally such contracts are not subject to modification; the consumer must “take it or leave it”.

Thus in disputes over the meaning of the language in such contracts, courts favour the party who did not prepare the document. Another helpful development is the requirement by statute that the language of consumer contracts be clear, simple, and understandable to the average person.

Generally courts seek to determine and to enforce the intent of the parties by applying the following rules of interpretation to written contracts:

The Writing Is to Be Considered as a Single, Whole Document

Each clause is interpreted in the light of all other provisions of the contract. Words are interpreted as they are ordinarily used unless circumstances indicate a different meaning. Legal and other technical terms or abbreviations are given their technical meaning unless the contract as a whole shows that a different meaning is intended.

Where a Printed Form Is Used, Added Typed Provisions Will Prevail over Contradictory Printed Provisions, and Added Handwritten Ones Will Prevail over both Printed and Typed Ones

An individual’s typing supersedes (replaces) printing because it presumably represents that person’s most recent intentions. Similarly, handwriting prevails over both printing and typing.

It is, nevertheless, good preventive law practice to have both parties initial all changes and to do this on all copies of the contract.