1
00:00:00,080 --> 00:00:03,520
Of ambiguities in contracts 
aiming to uphold the true intent

2
00:00:03,520 --> 00:00:06,280
of the parties while ensuring 
fairness and consistency. 

3
00:00:06,760 --> 00:00:10,280
The resolution of ambiguities is
a critical aspect of contract 

4
00:00:10,280 --> 00:00:13,840
interpretation as it directly 
impacts how the contract will be

5
00:00:13,840 --> 00:00:16,480
enforced and the rights and 
obligations of the parties 

6
00:00:16,480 --> 00:00:20,160
involved. 
One primary goal Ascertain 

7
00:00:20,160 --> 00:00:24,080
intent The primary goal in 
resolving ambiguities is to 

8
00:00:24,080 --> 00:00:26,960
ascertain the intent of the 
parties at the time the contract

9
00:00:26,960 --> 00:00:29,600
was formed. 
Courts will consider the entire 

10
00:00:29,600 --> 00:00:32,520
contract, giving effect to all 
provisions and avoiding 

11
00:00:32,520 --> 00:00:35,160
interpretations that render any 
term meaningless. 

12
00:00:35,640 --> 00:00:38,280
The intent of the parties is 
considered the most important 

13
00:00:38,280 --> 00:00:41,160
factor in contract 
interpretation, as it ensures 

14
00:00:41,160 --> 00:00:43,800
that the contract is enforced 
according to what the parties 

15
00:00:43,800 --> 00:00:48,240
actually agreed upon. 
Example A contract includes a 

16
00:00:48,240 --> 00:00:51,120
clause that is unclear about 
whether a particular payment is 

17
00:00:51,120 --> 00:00:53,160
due on the 1st or last day of 
the month. 

18
00:00:53,760 --> 00:00:56,480
The court will look at the 
contract as a whole, considering

19
00:00:56,480 --> 00:00:59,320
the context in which it was 
formed and the likely intent of 

20
00:00:59,320 --> 00:01:01,640
the parties. 
If other provisions in the 

21
00:01:01,640 --> 00:01:04,319
contract suggest that payments 
are generally made at the 

22
00:01:04,319 --> 00:01:06,680
beginning of the month, the 
court may interpret the 

23
00:01:06,680 --> 00:01:09,000
ambiguous clause to align with 
this pattern. 

24
00:01:09,480 --> 00:01:13,760
Methods for determining intent 
Courts may use various methods 

25
00:01:13,760 --> 00:01:16,800
to determine the intent of the 
parties, including analyzing the

26
00:01:16,800 --> 00:01:19,400
language of the contract, 
considering the contracts 

27
00:01:19,400 --> 00:01:22,200
purpose, and examining the 
conduct of the parties during 

28
00:01:22,200 --> 00:01:25,560
the performance of the contract.
The goal is to arrive at an 

29
00:01:25,560 --> 00:01:27,880
interpretation that is 
consistent with the party's 

30
00:01:27,880 --> 00:01:30,880
expectations and the overall 
purpose of the contract. 

31
00:01:31,320 --> 00:01:35,200
Two, construing against the 
drafter contraproferentem. 

32
00:01:35,720 --> 00:01:38,280
When an ambiguity cannot be 
resolved by standard 

33
00:01:38,280 --> 00:01:41,080
interpretation methods, courts 
may apply the rule of 

34
00:01:41,080 --> 00:01:44,520
contraproferentem, which 
construes ambiguities against 

35
00:01:44,520 --> 00:01:46,320
the party that drafted the 
contract. 

36
00:01:46,800 --> 00:01:49,680
This rule is particularly 
relevant in cases where one 

37
00:01:49,680 --> 00:01:52,800
party had greater control over 
the drafting process, as it 

38
00:01:52,800 --> 00:01:55,680
discourages the drafter from 
including ambiguous terms that 

39
00:01:55,680 --> 00:01:57,400
could be interpreted in their 
favor. 

40
00:01:57,880 --> 00:02:01,200
Example. 
A contractor drafted a contract 

41
00:02:01,200 --> 00:02:04,640
with ambiguous payment terms. 
If the terms are unclear and 

42
00:02:04,640 --> 00:02:07,720
cannot be resolved through other
methods, the court may resolve 

43
00:02:07,720 --> 00:02:10,800
the ambiguity in favor of the 
other party, interpreting the 

44
00:02:10,800 --> 00:02:13,520
terms in a manner less favorable
to the contractor. 

45
00:02:14,000 --> 00:02:16,800
For instance, if the payment 
terms could be interpreted to 

46
00:02:16,800 --> 00:02:20,000
allow for early payment with a 
discount, but the contractor did

47
00:02:20,000 --> 00:02:23,320
not clearly specify this in the 
contract, the court may rule 

48
00:02:23,320 --> 00:02:25,680
that the other party is entitled
to the discount. 

49
00:02:26,120 --> 00:02:30,760
Purpose of Contraproferentem The
rule of contraproferentem serves

50
00:02:30,760 --> 00:02:33,440
to protect the party with less 
bargaining power or less 

51
00:02:33,440 --> 00:02:35,400
involvement in drafting the 
contract. 

52
00:02:35,880 --> 00:02:39,400
It also incentivizes clear 
drafting, as the drafter is more

53
00:02:39,400 --> 00:02:42,400
likely to face unfavorable 
interpretations if they include 

54
00:02:42,400 --> 00:02:45,400
ambiguous terms. 
This rule is particularly 

55
00:02:45,400 --> 00:02:48,440
important in contracts where 
there is a significant disparity

56
00:02:48,440 --> 00:02:51,680
in bargaining power between the 
parties, such as in consumer 

57
00:02:51,680 --> 00:02:56,160
contracts or standard form 
contracts. 3 Preference for 

58
00:02:56,160 --> 00:02:59,960
consistency Courts generally 
prefer interpretations that 

59
00:02:59,960 --> 00:03:02,920
promote consistency and 
coherence within the contract. 

60
00:03:03,360 --> 00:03:06,360
This includes giving meaning to 
all parts of the contract and 

61
00:03:06,360 --> 00:03:09,120
avoiding interpretations that 
create contradictions. 

62
00:03:09,600 --> 00:03:12,400
The principle of consistency is 
crucial for ensuring that the 

63
00:03:12,400 --> 00:03:15,760
contract functions as a cohesive
whole, with all provisions 

64
00:03:15,760 --> 00:03:18,560
working together to achieve the 
party's intended purpose. 

65
00:03:19,000 --> 00:03:23,400
Example, A contract contains 2 
clauses that appear to conflict 

66
00:03:23,400 --> 00:03:26,800
regarding delivery timelines. 
One clause states that 

67
00:03:26,800 --> 00:03:29,920
deliveries must occur within 30 
days, while another clause 

68
00:03:29,920 --> 00:03:32,960
specifies 45 days for a 
particular delivery. 

69
00:03:33,400 --> 00:03:36,320
The court will interpret the 
clauses in a way that reconciles

70
00:03:36,320 --> 00:03:39,480
the apparent conflict, ensuring 
that both clauses can be given 

71
00:03:39,480 --> 00:03:42,040
effect. 
For example, the court may 

72
00:03:42,040 --> 00:03:45,000
determine that the 45 day 
timeline applies only to the 

73
00:03:45,000 --> 00:03:48,080
specific delivery mentioned, 
while the 30 day timeline 

74
00:03:48,080 --> 00:03:52,000
applies to all other deliveries.
Approach to Harmonization. 

75
00:03:52,760 --> 00:03:55,280
Courts strive to interpret 
contracts in a way that 

76
00:03:55,280 --> 00:03:58,360
harmonizes conflicting 
provisions, giving effect to all

77
00:03:58,360 --> 00:04:01,240
terms if possible. 
This approach ensures that the 

78
00:04:01,240 --> 00:04:04,640
contract is interpreted as a 
coherent document, with all 

79
00:04:04,640 --> 00:04:07,360
provisions working together to 
achieve the party's overall 

80
00:04:07,360 --> 00:04:09,960
objectives. 
When harmonization is not 

81
00:04:09,960 --> 00:04:13,760
possible, courts may prioritize 
specific provisions over general

82
00:04:13,760 --> 00:04:16,279
ones or apply other 
interpretative principles to 

83
00:04:16,279 --> 00:04:21,000
resolve the conflict. 
Four, external evidence When the

84
00:04:21,000 --> 00:04:24,240
ambiguity cannot be resolved 
through the text alone, courts 

85
00:04:24,240 --> 00:04:27,400
may consider external evidence, 
such as the party's prior 

86
00:04:27,400 --> 00:04:31,400
dealings, industry practices, or
relevant negotiations, to 

87
00:04:31,400 --> 00:04:34,680
clarify the meaning. 
The use of external evidence is 

88
00:04:34,680 --> 00:04:38,120
a critical tool for resolving 
ambiguities, particularly when 

89
00:04:38,120 --> 00:04:40,920
the contract language is unclear
or open to multiple 

90
00:04:40,920 --> 00:04:44,960
interpretations. 
Example, If a contract is 

91
00:04:44,960 --> 00:04:48,080
ambiguous about the quality 
standards for goods, the court 

92
00:04:48,080 --> 00:04:50,880
may look to industry standards 
or the party's previous 

93
00:04:50,880 --> 00:04:53,880
transactions to determine the 
intended quality level. 

94
00:04:54,320 --> 00:04:57,120
For instance, if the parties 
have previously agreed on a 

95
00:04:57,120 --> 00:05:00,680
particular quality standard and 
similar transactions, the court 

96
00:05:00,680 --> 00:05:03,840
may interpret the ambiguous term
in the current contract to align

97
00:05:03,840 --> 00:05:07,400
with this established standard. 
Types of External Evidence 

98
00:05:08,120 --> 00:05:11,440
External evidence can take many 
forms, including prior 

99
00:05:11,440 --> 00:05:15,160
negotiations, drafts of the 
contract, industry standards, 

100
00:05:15,320 --> 00:05:17,680
and the conduct of the parties 
during the performance of the 

101
00:05:17,680 --> 00:05:20,400
contract. 
Courts use this evidence to fill

102
00:05:20,400 --> 00:05:23,680
in gaps, clarify ambiguous 
terms, and ensure that the 

103
00:05:23,680 --> 00:05:26,760
contract is interpreted in a way
that reflects the party's true 

104
00:05:26,760 --> 00:05:29,760
intentions, challenges, and 
considerations. 

105
00:05:30,480 --> 00:05:33,600
The use of external evidence can
complicate the interpretation 

106
00:05:33,600 --> 00:05:36,760
process, as it introduces 
additional factors for the court

107
00:05:36,760 --> 00:05:39,760
to consider. 
However, it is often necessary 

108
00:05:39,760 --> 00:05:42,600
to ensure that ambiguities are 
resolved in a way that aligns 

109
00:05:42,600 --> 00:05:44,800
with the party's intentions and 
the realities of the 

110
00:05:44,800 --> 00:05:47,600
transaction. 
Courts must carefully balance 

111
00:05:47,600 --> 00:05:49,920
the need to respect the written 
contract with the need to 

112
00:05:49,920 --> 00:05:53,200
consider external evidence when 
ambiguities cannot be resolved 

113
00:05:53,200 --> 00:05:54,960
through the contract language 
alone. 

114
00:05:55,400 --> 00:05:59,120
Contradictions Contradictions 
within a contract occur when 

115
00:05:59,120 --> 00:06:01,880
different parts of the contract 
appear to provide conflicting 

116
00:06:01,880 --> 00:06:05,160
terms or obligations. 
Resolving contradictions 

117
00:06:05,160 --> 00:06:08,120
requires careful analysis to 
determine the dominant or 

118
00:06:08,120 --> 00:06:10,880
prevailing term while still 
attempting to harmonize the 

119
00:06:10,880 --> 00:06:14,040
contract as a whole. 
Contradictions can arise from 

120
00:06:14,040 --> 00:06:17,520
poor drafting, changes in 
circumstances, or simply from 

121
00:06:17,520 --> 00:06:19,560
the complexity of the contract 
itself. 

122
00:06:20,080 --> 00:06:25,800
Key Points One Harmonization 
Courts strive to interpret 

123
00:06:25,800 --> 00:06:28,240
contracts in a way that 
harmonizes conflicting 

124
00:06:28,240 --> 00:06:31,160
provisions, giving effect to all
terms if possible. 

125
00:06:31,680 --> 00:06:34,520
The principle of harmonization 
ensures that the contract is 

126
00:06:34,520 --> 00:06:37,880
interpreted as a cohesive 
document, with all parts working

127
00:06:37,880 --> 00:06:40,280
together to achieve the party's 
intended purpose. 

128
00:06:40,760 --> 00:06:43,600
Harmonization is the preferred 
approach because it respects the

129
00:06:43,600 --> 00:06:46,520
integrity of the contract and 
the intentions of the parties. 

130
00:06:46,960 --> 00:06:51,200
Example, A contract includes a 
provision requiring quarterly 

131
00:06:51,200 --> 00:06:54,080
payments, but also contains a 
clause stating that payments are

132
00:06:54,080 --> 00:06:57,280
due at the end of each month. 
The court would analyze the 

133
00:06:57,280 --> 00:07:00,440
context and intend to determine 
which provision prevails or 

134
00:07:00,440 --> 00:07:02,880
whether the contract can be 
interpreted in a way that 

135
00:07:02,880 --> 00:07:06,360
reconciles the two clauses. 
For instance, the court may 

136
00:07:06,360 --> 00:07:08,960
conclude that the quarterly 
payments clause refers to a 

137
00:07:08,960 --> 00:07:12,080
specific type of payment, while 
the monthly payments clause 

138
00:07:12,080 --> 00:07:14,920
applies to regular payments, 
thereby harmonizing the 

139
00:07:14,920 --> 00:07:17,800
provisions Approach to 
harmonization. 

140
00:07:18,520 --> 00:07:21,480
Courts will first attempt to 
reconcile conflicting provisions

141
00:07:21,480 --> 00:07:24,440
by interpreting the contract in 
a way that gives effect to both 

142
00:07:24,440 --> 00:07:27,040
terms. 
If this is not possible, the 

143
00:07:27,040 --> 00:07:30,440
court may prioritize 1 provision
over the other based on factors 

144
00:07:30,440 --> 00:07:34,000
such as specificity, context, 
and the overall purpose of the 

145
00:07:34,000 --> 00:07:36,520
contract. 
The goal is to arrive at an 

146
00:07:36,520 --> 00:07:39,880
interpretation that is logical, 
fair, and consistent with the 

147
00:07:39,880 --> 00:07:45,640
party's intentions. 2 Specific 
versus General Provisions When a

148
00:07:45,640 --> 00:07:48,640
specific provision conflicts 
with a general provision, the 

149
00:07:48,640 --> 00:07:51,840
specific provision typically 
prevails as it is assumed to 

150
00:07:51,840 --> 00:07:54,160
reflect the party's more precise
intentions. 

151
00:07:54,680 --> 00:07:57,760
This principle is based on the 
idea that specific terms are 

152
00:07:57,760 --> 00:08:00,920
more likely to represent the 
party's true agreement as they 

153
00:08:00,920 --> 00:08:04,040
address particular aspects of 
the contract in detail. 

154
00:08:04,520 --> 00:08:08,800
Example, a contract contains a 
general clause stating that all 

155
00:08:08,800 --> 00:08:12,000
deliveries are due within 30 
days, but a specific clause 

156
00:08:12,000 --> 00:08:15,360
states that one particular 
delivery is due within 15 days. 

157
00:08:15,840 --> 00:08:18,280
The specific clause would 
prevail for that particular 

158
00:08:18,280 --> 00:08:21,400
delivery, as it is assumed to 
reflect the party's specific 

159
00:08:21,400 --> 00:08:23,800
intentions regarding the timing 
of that delivery. 

160
00:08:24,280 --> 00:08:27,840
Rationale for the principle. 
The preference for specific 

161
00:08:27,840 --> 00:08:30,640
provisions over general ones is 
grounded in the belief that 

162
00:08:30,640 --> 00:08:33,280
parties are more likely to have 
carefully considered and 

163
00:08:33,280 --> 00:08:36,679
negotiated specific terms, 
whereas general terms may be 

164
00:08:36,679 --> 00:08:39,240
included as boilerplate or 
standard language. 

165
00:08:39,760 --> 00:08:43,000
By prioritizing specific 
provisions, courts ensure that 

166
00:08:43,000 --> 00:08:45,680
the contract is interpreted in a
way that aligns with the 

167
00:08:45,680 --> 00:08:47,200
parties. 
Detailed and deliberate 

168
00:08:47,200 --> 00:08:51,400
agreements 3. 
Analyzing the Context and Intent

169
00:08:52,080 --> 00:08:55,640
When faced with contradictions, 
courts analyze the context in 

170
00:08:55,640 --> 00:08:58,520
which the contract was formed 
and the parties likely intent to

171
00:08:58,520 --> 00:09:00,480
determine which provision should
prevail. 

172
00:09:00,920 --> 00:09:04,040
This analysis may involve 
considering the overall purpose 

173
00:09:04,040 --> 00:09:06,560
of the contract, the 
circumstances surrounding its 

174
00:09:06,560 --> 00:09:09,160
formation, and the conduct of 
the parties during the 

175
00:09:09,160 --> 00:09:14,000
performance of the contract. 
Example A contract specifies 

176
00:09:14,000 --> 00:09:17,080
that a particular product must 
be delivered by air freight, but

177
00:09:17,080 --> 00:09:19,520
another clause allows for ground
transportation. 

178
00:09:19,520 --> 00:09:22,920
As an alternative, the court 
would consider the context in 

179
00:09:22,920 --> 00:09:26,120
which these provisions were 
included, such as the urgency of

180
00:09:26,120 --> 00:09:29,360
the delivery, the nature of the 
product, and the party's prior 

181
00:09:29,360 --> 00:09:32,080
dealings. 
If the product is perishable and

182
00:09:32,080 --> 00:09:35,440
requires fast delivery, the 
court may prioritize the air 

183
00:09:35,440 --> 00:09:37,880
freight provision to ensure that
the product reaches its 

184
00:09:37,880 --> 00:09:41,000
destination in time. 
Tools for Analyzing 

185
00:09:41,000 --> 00:09:45,040
Contradictions Courts may use 
various tools to analyze 

186
00:09:45,040 --> 00:09:48,560
contradictions, including the 
principles of harmonization, the

187
00:09:48,560 --> 00:09:51,120
preference for specific 
provisions, and the use of 

188
00:09:51,120 --> 00:09:54,720
external evidence. 
By applying these tools, courts 

189
00:09:54,720 --> 00:09:57,760
can resolve contradictions in a 
way that respects the contract's

190
00:09:57,760 --> 00:10:01,600
integrity and aligns with the 
party's true intentions. 4 

191
00:10:02,080 --> 00:10:05,880
Interpretation Aids In addition 
to the rules and principles 

192
00:10:05,880 --> 00:10:09,480
discussed above, courts often 
rely on various interpretation 

193
00:10:09,480 --> 00:10:12,160
aids to clarify the meaning of 
contractual terms. 

194
00:10:12,600 --> 00:10:15,920
These aids include the course of
performance, course of dealing, 

195
00:10:16,040 --> 00:10:19,600
and usage of trade, all of which
provide valuable context for 

196
00:10:19,600 --> 00:10:22,240
interpreting contracts within 
specific industries or 

197
00:10:22,240 --> 00:10:24,800
situations. 
These aids help courts 

198
00:10:24,800 --> 00:10:28,000
understand the contract in its 
broader context, ensuring that 

199
00:10:28,000 --> 00:10:30,520
the interpretation aligns with 
the parties established 

200
00:10:30,520 --> 00:10:32,560
practices and industry 
standards. 

201
00:10:33,040 --> 00:10:36,360
Course of Performance Course of 
performance refers to the 

202
00:10:36,360 --> 00:10:39,080
conduct of the parties during 
the performance of the contract 

203
00:10:39,080 --> 00:10:41,720
in question. 
This interpretation aid is 

204
00:10:41,720 --> 00:10:44,480
particularly useful when the 
contract has been partially 

205
00:10:44,480 --> 00:10:47,360
performed, as it provides 
insight into how the parties 

206
00:10:47,360 --> 00:10:50,080
themselves understood and 
applied the contract terms. 

207
00:10:50,560 --> 00:10:53,280
The course of performance can 
reveal the party's practical 

208
00:10:53,280 --> 00:10:56,480
interpretation of the contract, 
offering strong evidence of 

209
00:10:56,480 --> 00:11:01,080
their intentions. 
Key Points One Relevance of 

210
00:11:01,080 --> 00:11:04,760
conduct The way the parties have
performed their obligations 

211
00:11:04,760 --> 00:11:07,920
under the contract can provide 
strong evidence of their intent 

212
00:11:07,960 --> 00:11:09,680
and the meaning of ambiguous 
terms. 

213
00:11:10,160 --> 00:11:12,360
If both parties have 
consistently performed the 

214
00:11:12,360 --> 00:11:15,560
contract in a particular way, 
this conduct can serve as an 

215
00:11:15,560 --> 00:11:18,760
interpretative guide indicating 
how the contract should be 

216
00:11:18,760 --> 00:11:22,320
understood. 
Example A contract for the 

217
00:11:22,320 --> 00:11:25,120
supply of goods specifies 
delivery on the 1st of each 

218
00:11:25,120 --> 00:11:28,280
month, but the parties have 
consistently accepted deliveries

219
00:11:28,280 --> 00:11:30,160
on the 3rd of each month without
issue. 

220
00:11:30,600 --> 00:11:33,080
The course of performance may 
suggest that the parties 

221
00:11:33,080 --> 00:11:36,200
intended a more flexible 
delivery schedule, and the court

222
00:11:36,200 --> 00:11:38,200
may interpret the contract 
accordingly. 

223
00:11:38,680 --> 00:11:41,360
This interpretation would align 
with the party's established 

224
00:11:41,360 --> 00:11:44,320
practice, ensuring that the 
contract is enforced in a way 

225
00:11:44,320 --> 00:11:48,480
that reflects their actual 
conduct. 2 Consistency in 

226
00:11:48,480 --> 00:11:51,520
performance. 
Courts give way to consistent 

227
00:11:51,520 --> 00:11:54,560
performance, especially when 
both parties have adhered to the

228
00:11:54,560 --> 00:11:56,640
same interpretation without 
objection. 

229
00:11:57,080 --> 00:12:00,000
Consistent performance over time
can establish a pattern of 

230
00:12:00,000 --> 00:12:02,880
behavior that clarifies the 
meaning of ambiguous terms, 

231
00:12:03,000 --> 00:12:05,720
providing a reliable basis for 
interpretation. 

232
00:12:06,160 --> 00:12:10,880
Example If a contract requires 
payments to be made monthly, but

233
00:12:10,880 --> 00:12:13,440
the parties have consistently 
followed a pattern of making 

234
00:12:13,440 --> 00:12:16,720
payments every six weeks, this 
consistent performance can be 

235
00:12:16,720 --> 00:12:18,680
used to interpret the payment 
schedule. 

236
00:12:19,120 --> 00:12:22,120
The court may conclude that the 
parties intended a more flexible

237
00:12:22,120 --> 00:12:25,280
payment schedule reflecting 
their actual practice rather 

238
00:12:25,280 --> 00:12:29,360
than a strict monthly schedule. 
Impact on Contractual Disputes 

239
00:12:30,040 --> 00:12:32,880
The course of performance is a 
powerful tool for resolving 

240
00:12:32,880 --> 00:12:36,560
disputes over ambiguous terms, 
as it provides concrete evidence

241
00:12:36,560 --> 00:12:38,920
of how the parties have 
interpreted and applied the 

242
00:12:38,920 --> 00:12:41,880
contract in practice. 
By relying on the party's 

243
00:12:41,880 --> 00:12:45,200
conduct, courts can arrive at an
interpretation that aligns with 

244
00:12:45,200 --> 00:12:48,280
the realities of the contractual
relationship, reducing the 

245
00:12:48,280 --> 00:12:51,080
likelihood of disputes and 
ensuring that the contract is 

246
00:12:51,080 --> 00:12:53,920
enforced in a way that reflects 
the party's true intentions. 

247
00:12:54,400 --> 00:12:57,840
Course of Dealing Course of 
dealing refers to the previous 

248
00:12:57,840 --> 00:13:00,560
transactions between the parties
that establish a common 

249
00:13:00,560 --> 00:13:02,600
understanding or pattern of 
behavior. 

250
00:13:03,080 --> 00:13:06,080
This history can provide context
for interpreting terms in the 

251
00:13:06,080 --> 00:13:09,040
current contract, particularly 
when the parties have a long 

252
00:13:09,040 --> 00:13:12,000
standing relationship. 
The course of dealing helps to 

253
00:13:12,000 --> 00:13:14,840
clarify ambiguous terms by 
showing how the parties have 

254
00:13:14,840 --> 00:13:18,040
previously interpreted similar 
terms in their past dealings. 

255
00:13:18,480 --> 00:13:24,560
Key Points 1 Past Transactions 
Courts consider how the parties 

256
00:13:24,560 --> 00:13:27,440
have conducted business in the 
past to interpret ambiguous 

257
00:13:27,440 --> 00:13:30,920
terms in the current contract. 
The course of dealing provides a

258
00:13:30,920 --> 00:13:33,920
historical context that can 
clarify the meaning of terms, 

259
00:13:34,080 --> 00:13:37,040
particularly when the same or 
similar terms have been used in 

260
00:13:37,040 --> 00:13:41,360
previous transactions. 
Example Two companies have 

261
00:13:41,360 --> 00:13:45,080
engaged in a series of contracts
over several years consistently 

262
00:13:45,080 --> 00:13:48,440
using the same payment terms in 
the current contract. 

263
00:13:48,560 --> 00:13:51,400
The payment terms are ambiguous,
but the court looks to the 

264
00:13:51,400 --> 00:13:54,200
course of dealing to interpret 
them consistently with past 

265
00:13:54,200 --> 00:13:56,680
practice. 
If the companies have always 

266
00:13:56,680 --> 00:13:59,760
interpreted the payment terms to
mean payment within 30 days of 

267
00:13:59,760 --> 00:14:02,720
delivery, the court may apply 
this interpretation to the 

268
00:14:02,720 --> 00:14:07,760
current contract. 
Two, establishing context course

269
00:14:07,760 --> 00:14:10,160
of dealing is particularly 
valuable when the current 

270
00:14:10,160 --> 00:14:13,800
contract builds on or continues 
a previous relationship as it 

271
00:14:13,800 --> 00:14:16,080
reflects the party's established
practices. 

272
00:14:16,560 --> 00:14:19,360
The course of dealing can help 
to fill in gaps or clarify 

273
00:14:19,360 --> 00:14:21,920
ambiguities in the current 
contract by providing a 

274
00:14:21,920 --> 00:14:24,720
consistent pattern of behavior 
that aligns with the party's 

275
00:14:24,720 --> 00:14:28,680
expectations. 
Example, if a supplier and a 

276
00:14:28,680 --> 00:14:31,200
buyer have a long standing 
relationship where they have 

277
00:14:31,200 --> 00:14:34,640
always used the same delivery 
terms, the court may use this 

278
00:14:34,640 --> 00:14:37,680
course of dealing to interpret 
ambiguous delivery terms in a 

279
00:14:37,680 --> 00:14:40,200
new contract. 
The court would assume that the 

280
00:14:40,200 --> 00:14:42,960
parties intended to continue 
their established practice 

281
00:14:43,160 --> 00:14:45,280
unless there is evidence to the 
contrary. 

282
00:14:45,800 --> 00:14:49,520
Challenges and considerations 
While the course of dealing is a

283
00:14:49,520 --> 00:14:53,160
valuable tool for interpreting 
contracts, it can also introduce

284
00:14:53,160 --> 00:14:56,360
challenges, particularly if the 
past transactions were not 

285
00:14:56,360 --> 00:14:59,680
entirely consistent or if the 
party's relationship has evolved

286
00:14:59,680 --> 00:15:02,520
over time. 
Courts must carefully evaluate 

287
00:15:02,520 --> 00:15:05,800
the relevance of past dealings, 
considering factors such as 

288
00:15:05,800 --> 00:15:08,880
changes in the business 
relationship, market conditions,

289
00:15:09,080 --> 00:15:11,680
and the specific context of the 
current contract. 

290
00:15:12,160 --> 00:15:16,240
Usage of Trade Usage of trade 
refers to the common practices 

291
00:15:16,240 --> 00:15:19,080
or customs within a particular 
industry or trade that can 

292
00:15:19,080 --> 00:15:21,520
inform the interpretation of 
contract terms. 

293
00:15:21,960 --> 00:15:25,120
Courts consider these practices 
to ensure that contracts are 

294
00:15:25,120 --> 00:15:28,160
interpreted in line with 
industry standards, especially 

295
00:15:28,160 --> 00:15:31,520
when the parties are engaged in 
specialized or technical fields.

296
00:15:32,000 --> 00:15:34,520
Usage of trade provides a 
broader context for 

297
00:15:34,520 --> 00:15:37,880
understanding contract terms, 
ensuring that the interpretation

298
00:15:37,880 --> 00:15:40,760
aligns with the norms and 
expectations of the industry. 

299
00:15:41,200 --> 00:15:46,680
Key points One Industry 
standards Usage of trade 

300
00:15:46,680 --> 00:15:49,280
provides context for 
interpreting terms that may have

301
00:15:49,280 --> 00:15:52,240
specific meanings within a 
particular industry, even if 

302
00:15:52,240 --> 00:15:54,440
those meanings differ from 
general usage. 

303
00:15:54,920 --> 00:15:58,000
Courts use industry standards to
ensure that contracts are 

304
00:15:58,000 --> 00:16:00,800
interpreted in a way that is 
consistent with the practices 

305
00:16:00,800 --> 00:16:03,640
and expectations of the 
industry, particularly when the 

306
00:16:03,640 --> 00:16:05,600
parties are industry 
professionals. 

307
00:16:06,040 --> 00:16:10,240
Example In the construction 
industry, the term substantial 

308
00:16:10,240 --> 00:16:12,840
completion has a specific 
meaning that differs from its 

309
00:16:12,840 --> 00:16:15,400
general usage. 
A court interpreting a 

310
00:16:15,400 --> 00:16:18,360
construction contract would 
consider the industry standard 

311
00:16:18,360 --> 00:16:21,240
definition of substantial 
completion as established by the

312
00:16:21,240 --> 00:16:24,160
usage of trade. 
This interpretation would align 

313
00:16:24,160 --> 00:16:27,480
with the expectations of the 
parties who are likely familiar 

314
00:16:27,480 --> 00:16:31,520
with the industry specific 
meaning of the term. 2 Implied 

315
00:16:31,520 --> 00:16:36,040
Terms In some cases, usage of 
trade may imply certain terms 

316
00:16:36,040 --> 00:16:39,200
into a contract, especially if 
those terms are so common that 

317
00:16:39,200 --> 00:16:41,080
they are assumed to be part of 
the agreement. 

318
00:16:41,560 --> 00:16:45,160
Courts may imply terms based on 
industry customs to fill in gaps

319
00:16:45,160 --> 00:16:48,600
or clarify ambiguities, ensuring
that the contract aligns with 

320
00:16:48,600 --> 00:16:52,880
the norms of the trade. 
Example, A contract for the sale

321
00:16:52,880 --> 00:16:56,320
of agricultural products may not
explicitly state the standard 

322
00:16:56,320 --> 00:16:59,560
for good quality, but the court 
may imply a standard based on 

323
00:16:59,560 --> 00:17:02,240
the usage of trade in the 
agriculture industry. 

324
00:17:02,720 --> 00:17:05,240
If the industry has a well 
established standard for what 

325
00:17:05,240 --> 00:17:08,800
constitutes good quality, the 
court may interpret the contract

326
00:17:08,800 --> 00:17:12,359
to include this standard even if
it is not explicitly stated. 

327
00:17:12,839 --> 00:17:16,560
Challenges and Considerations 
While usage of trade is a 

328
00:17:16,560 --> 00:17:20,200
valuable tool for interpreting 
contracts, it can also introduce

329
00:17:20,200 --> 00:17:23,560
challenges, particularly if the 
industry standards are not well 

330
00:17:23,560 --> 00:17:26,599
defined or if the parties are 
not fully aware of the relevant 

331
00:17:26,599 --> 00:17:29,440
customs. 
Courts must carefully evaluate 

332
00:17:29,440 --> 00:17:32,480
the relevance and applicability 
of industry standards, 

333
00:17:32,640 --> 00:17:35,600
considering factors such as the 
party's familiarity with the 

334
00:17:35,600 --> 00:17:39,240
trade, the specificity of the 
terms, and the broader context 

335
00:17:39,240 --> 00:17:41,880
of the contract. 
Impact on Contractual 

336
00:17:41,880 --> 00:17:45,840
Relationships The use of trade 
is particularly important in the

337
00:17:45,840 --> 00:17:49,200
industries where contracts often
include technical terms or 

338
00:17:49,200 --> 00:17:52,720
industry specific language. 
By considering industry 

339
00:17:52,720 --> 00:17:55,960
standards, courts can ensure 
that contracts are interpreted 

340
00:17:55,960 --> 00:17:58,800
in a way that aligns with the 
party's expectations and the 

341
00:17:58,800 --> 00:18:02,120
norms of the trade, reducing the
likelihood of disputes and 

342
00:18:02,120 --> 00:18:04,920
promoting consistency in 
contractual relationships. 

343
00:18:05,360 --> 00:18:09,560
Conclusion Chapter 9, Contract 
Interpretation, provides a 

344
00:18:09,560 --> 00:18:13,480
comprehensive examination of the
principles, rules, and aids that

345
00:18:13,480 --> 00:18:15,480
guide the interpretation of 
contracts. 

346
00:18:16,000 --> 00:18:19,000
From the foundational plain 
meaning rule and parole evidence

347
00:18:19,000 --> 00:18:21,720
rule to the nuanced 
considerations of ambiguities 

348
00:18:21,720 --> 00:18:24,920
and contradictions, this chapter
equips readers with the tools 

349
00:18:24,920 --> 00:18:27,920
necessary to navigate complex 
contract disputes. 

350
00:18:28,360 --> 00:18:31,880
The use of interpretation aids 
such as course of performance, 

351
00:18:32,080 --> 00:18:35,280
course of dealing, and usage of 
trade, further enriches the 

352
00:18:35,280 --> 00:18:38,400
interpretative process by 
providing context and clarity 

353
00:18:38,400 --> 00:18:41,360
within specific industries or 
ongoing relationships. 

354
00:18:41,840 --> 00:18:44,720
By understanding these 
principles, parties can better 

355
00:18:44,720 --> 00:18:47,720
anticipate how their contracts 
will be interpreted in the event

356
00:18:47,720 --> 00:18:50,920
of a dispute, leading to more 
effective contract drafting and 

357
00:18:50,920 --> 00:18:53,840
negotiation. 
Moreover, courts and legal 

358
00:18:53,840 --> 00:18:56,400
professionals can apply these 
principles to resolve 

359
00:18:56,400 --> 00:18:59,240
ambiguities and contradictions 
in a manner that reflects the 

360
00:18:59,240 --> 00:19:01,760
true intent of the parties while
maintaining fairness and 

361
00:19:01,760 --> 00:19:06,040
consistency in contract law. 
Summary of Chapter 9 Contract 

362
00:19:06,040 --> 00:19:09,960
Interpretation Chapter 9 delves 
into the intricate process of 

363
00:19:09,960 --> 00:19:13,160
interpreting contracts, focusing
on how ambiguities, 

364
00:19:13,360 --> 00:19:16,640
contradictions, and various 
interpretative aides are handled

365
00:19:16,640 --> 00:19:19,800
in legal practice. 
The chapter is divided into key 

366
00:19:19,800 --> 00:19:22,920
sections that address the common
challenges faced in contract 

367
00:19:22,920 --> 00:19:25,480
interpretation and the 
principles and tools used to 

368
00:19:25,480 --> 00:19:29,480
resolve them. 
Ambiguities in Contracts Types 

369
00:19:29,480 --> 00:19:32,520
of Ambiguities The chapter 
begins by explaining the two 

370
00:19:32,520 --> 00:19:35,120
main types of ambiguities, 
patent and latent. 

371
00:19:35,680 --> 00:19:38,680
Patent ambiguities are apparent 
on the face of the contract, 

372
00:19:38,760 --> 00:19:42,080
while latent ambiguities become 
evident only when the contract 

373
00:19:42,080 --> 00:19:45,680
is applied to specific facts. 
Resolving ambiguities. 

374
00:19:45,840 --> 00:19:49,040
Courts use several methods to 
resolve ambiguities, with the 

375
00:19:49,040 --> 00:19:51,960
primary goal being to ascertain 
the intent of the parties. 

376
00:19:52,400 --> 00:19:55,320
Tools such as the rule of 
contraproferentem, which 

377
00:19:55,320 --> 00:19:58,560
construes ambiguities against 
the drafter and a preference for

378
00:19:58,560 --> 00:20:01,840
consistency in interpreting the 
contract are crucial in this 

379
00:20:01,840 --> 00:20:04,760
process. 
Contradictions in contracts. 

380
00:20:05,520 --> 00:20:08,720
Harmonization The chapter 
explains how courts strive to 

381
00:20:08,720 --> 00:20:12,200
harmonize conflicting provisions
within a contract, giving effect

382
00:20:12,200 --> 00:20:15,400
to all terms if possible. 
When a specific provision 

383
00:20:15,400 --> 00:20:18,520
conflicts with a general one, 
the specific provision typically

384
00:20:18,520 --> 00:20:21,720
prevails. 
Analyzing Context and intent 

385
00:20:21,880 --> 00:20:25,080
Courts analyze the context in 
which the contract was formed 

386
00:20:25,080 --> 00:20:27,920
and the parties likely intent to
determine which provision should

387
00:20:27,920 --> 00:20:29,800
prevail. 
When contradictions arise, 

388
00:20:30,280 --> 00:20:33,600
interpretation aids course of 
performance. 

389
00:20:33,840 --> 00:20:36,520
This section discusses how the 
conduct of the parties during 

390
00:20:36,520 --> 00:20:39,440
the performance of the contract 
can provide insight into their 

391
00:20:39,440 --> 00:20:41,800
intent and clarify ambiguous 
terms. 

392
00:20:42,240 --> 00:20:45,600
Course of dealing the history of
past transactions between the 

393
00:20:45,600 --> 00:20:48,800
parties is used to establish a 
common understanding or pattern 

394
00:20:48,800 --> 00:20:51,560
of behavior that can inform the 
interpretation of the current 

395
00:20:51,560 --> 00:20:54,440
contract. 
Usage of trade, industry 

396
00:20:54,440 --> 00:20:57,480
standards and common practices 
within a particular trade or 

397
00:20:57,480 --> 00:21:00,080
industry are considered to 
ensure that contracts are 

398
00:21:00,080 --> 00:21:02,760
interpreted in line with these 
norms, especially when 

399
00:21:02,760 --> 00:21:05,200
specialized or technical 
language is used. 

400
00:21:05,640 --> 00:21:09,240
Conclusion Chapter 9 highlights 
the complexity of contract 

401
00:21:09,240 --> 00:21:11,520
interpretation and the 
importance of applying 

402
00:21:11,520 --> 00:21:14,800
consistent principles and tools 
to resolve ambiguities and 

403
00:21:14,800 --> 00:21:17,840
contradictions. 
By understanding these methods, 

404
00:21:18,000 --> 00:21:21,480
legal professionals can better 
draft, negotiate, and enforce 

405
00:21:21,480 --> 00:21:24,520
contracts, ensuring that they 
reflect the true intentions of 

406
00:21:24,520 --> 00:21:27,680
the parties and are interpreted 
fairly and consistently in legal

407
00:21:27,680 --> 00:21:28,440
disputes.
