What are the principles of contract interpretation?

Contract interpretation is an important part of Business Transaction Law in California. It is the process of determining the legal meaning of a contract. This involves looking at the language of the contract, as well as the intent of the parties involved. The rules of contract interpretation are based on certain principles. The first principle is the “plain meaning” rule. This rule provides that a contract should be interpreted based on the plain and common meaning of the words used. Therefore, a court looks at the words of the contract, rather than going beyond the words and looking for hidden meanings and intentions. The second principle is that of “contra proferentem”, which means that the contract should be interpreted against the party who drafted it. This is because the party who drafts the contract can be presumed to be more knowledgeable about the legal implications of the contract. Therefore, the party who drafted the contract can be held responsible for any ambiguous language used in the contract. The third principle is the “parol evidence” rule, which provides that oral or extrinsic evidence cannot be used to contradict the terms of a contract. Therefore, any prior agreements or discussions prior to the signing of a contract cannot be used as evidence to modify or vary the terms of the contract. Finally, the fourth principle of contract interpretation is that of “precedent”, which means that a court should look to prior decisions when interpreting a contract. This ensures that contracts are interpreted in a consistent manner, and that similar circumstances are treated uniformly. This principle also encourages parties to draft their contracts with specific language to avoid any misinterpretations by a court.

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What are the principles of contract interpretation?

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