Implications Of The Modern Approach To The Interpretation Of Contracts

Abstract

The traditional approach to contract interpretation is that the interpretation of a contract is a formalistic exercise which has in place rules to prevent a court from straying from plain meaning or looking outside the four corners of a written contract. The modern approach to contract interpretation puts commercial sense ahead of plain meaning, and is contextual. Contextual interpretation means that a court should look to evidence outside a written contract to ascertain the meaning of that contract. This thesis considers the implications that the modern approach has for the following other issues in contract law: • Objectivity: the debate over what it means to take an ‘objective approach’ to issues of contract formation and construction; • Implication: whether implication is distinct from interpretation and, if so, what the test for the implication of terms should be; • Rectification: whether the modern approach to contract interpretation means that rectification is now unnecessary and, if not, when rectification is appropriate; • The Interpretation of Offers: whether the interpretation of offers requires a distinct approach from the interpretation of contracts, and the test for when offers lapse after a change in circumstances; and • The Battle of the Forms: whether a ‘battle of the forms’ should be resolved as a matter of the formation or construction of the contract. I provide resolutions for all these issues given the adoption of the modern approach to contract interpretation. Having done so, I then make a number of points. First, I argue that the modern approach leads us to accept radical constructivism, the position that the process of construction is a gestalt. Radical constructivism allows for the unification of traditionally distinct bodies of case law that are essentially concerned with the same thing: the intentions of the parties. Second, I argue that there is room to align traditionally distinct inquiries concern with the commercial feasibility of a proposed construction. Third, I argue that contracting by legal persons is an important cause of modern contract law cases. Finally, I note the two-way nature of the relationship between our understanding of objectivity theory in contract law and the development of the detail of particular areas of contract law.