Know These Interpretation Principles Before You Draft a Contract

When a contract dispute arises, there may be differing interpretations of the contract terms. A court asked to construe the disputed terms will look to statutory principles. But don’t wait for a dispute to learn these principles—be aware of them when drafting an agreement to ensure that they won’t counteract your client’s intent.  Here are 11 of the most common principles that the courts use in interpreting contracts: If possible, a contract is interpreted to give meaning to all its provisions (CC §1641; CCP §1858) and to be lawful, operative, definite, reasonable, and capable of being given effect (CC §1643). Technical words are interpreted according to their technical meanings, and nontechnical words are interpreted according to their ordinary meanings. CC §§1644–1645. A contract is construed according to the law of the place where it’s to be performed or, if the place of performance is not indicated, where it…

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