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CHAPTER 10

Interpretation and Construction: Resolving Meaning and Dealing with Uncertainty in Agreements

§10.1 ASCERTAINING THE MEANING OF AN AGREEMENT: INTERPRETATION AND CONSTRUCTION

§10.1.1 Introduction to the Process of Interpretation and Construction

The processes of interpretation (inferring meaning from facts) and construction (inferring meaning as a matter of law) have been alluded to in earlier chapters.1 If you have read them already, the basic point of the present discussion will not be entirely unfamiliar. This section more closely examines and differentiates the methods and uses of the related, but separate, functions of interpretation and construction. To begin, a broad distinction may be drawn:

  Restatement, Second, §200 describes interpretation as the ascertainment of the meaning of a promise or agreement. It is an evaluation of facts (that is, evidence of what the parties said and did and the circumstances surrounding their communications) for the purpose of deciding their mutual intent. The word “construction” is sometimes used interchangeably with “interpretation,” but properly speaking, it does have a different meaning. Construction is the implication of a term in law. It usually occurs where it appears that the parties did not actually deal with a particular issue in their contract, and there is no factual evidence to establish how they intended that issue to be handled. That is, although it is clear that the parties did make a contract, they just did not address this particular issue. The court may therefore determine, based on what it knows of the contract and its context, how the parties would have dealt with this issue had they thought of it.

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