Primer on Contract Interpretation (Part 2)

more+
less-

As mentioned in Part 1, the Alberta Court of Appeal (in Bhasin v. Hrynew) has provided some helpful guidelines to assist with basic contract interpretation.

If you deal with contracts in your job, then here are some tips to see how the courts will interpret your agreements.

From time to time a question comes up about what terms are “implied” in the written agreement. Yes, the terms appear clear to one side, but the other side argues that certain provisions should be included by implication, even though those terms are not specifically written in the contract. What is the Court’s view on this? To paraphrase from the judgement:

  • Courts are generally against implying terms into a written agreement.
  • Courts can imply terms in contracts only when the new term is: (i) so obvious that it was not even thought necessary to mention, or (ii) truly necessary to make the contract work at all. This is not a question of making the contact “merely reasonable” or “fair” for both sides, but a question of what is completely obvious or absolutely essential for the contract to make sense.
  • Merely foreseeing that something might happen is not enough to justify adding implied terms; both parties “must have intended the term” to be included.
  • A term cannot be implied in a contract which would contradict an express term of that contract. In other words, an implied term cannot be added where it would go against the clear written provisions that the parties agreed to.

More to come.

Topics:  Contract Interpretation, Terms and Conditions

Published In: General Business Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Field Law | Attorney Advertising

Don't miss a thing! Build a custom news brief:

Read fresh new writing on compliance, cybersecurity, Dodd-Frank, whistleblowers, social media, hiring & firing, patent reform, the NLRB, Obamacare, the SEC…

…or whatever matters the most to you. Follow authors, firms, and topics on JD Supra.

Create your news brief now - it's free and easy »