construction contract low
Mo7amed
Guideto2ndassignmentquestion.pptxAssignment one question 2
Marking criteria.
1. Discuss the interpretation aids provided in standard form building contracts. ( "The contract itself may assist with the process of interpretation by any of all of the following types of provisions") ( 3 marks) Please explain by the use of all relevant authority in the text of your answer and you can refer such as attachments.
2. Discuss the key general contract interpretation principles applicable to construction of contracts .(3 marks) Please explain by the use of all relevant authority in the text of your answer and you can refer such as attachments.
3. What is the role played by the parol evidence rule and the entire contract clause in the construction of contracts? (3 marks) Please explain by the use of all relevant authority in the text of your answer and you can refer such as attachments.
Use of the standard form contracts.
This question is one that demands the referencing and attachments of clauses from the four standard form contracts I have provided.
Consider the contracts individually and compare “like” clauses in the contracts.
I hope most of you have finished the first question.
I suggest you go back and see where you can refer to the standard form construction contracts.
E.g. the participants- use the “superintendent” clauses
I refer to some, but only some, not a complete list of standard form commercial and domestic contract clauses that you can use in your assignment
Prescribed textbook.
The next three slides have extracts from the prescribed textbook.
Purpose of the slides is to give you an overview of the textbook authors discussion on interpreting construction contracts
p.103 PTB
Unfortunately, many construction contracts include words and phraseology which are inconsistent and unclear at best and dangerous at worst. This often results from the proliferation of documents making up the contract and the enthusiasm of those preparing the specifications and other technical documents to cover the field. It is also very important to note the distinction between meanings of words used by architects and engineers, and the meaning given to them by lawyers. For example, an intended subjective “reasonable” may be construed objectively, and the duties expected of a person providing “supervision” may be much greater than the intended managerial superintendence.
p.99 PTB
Ambiguities and inconsistencies
[5.220]
Contracts for major construction projects rarely suffer from an insufficiency of documentation and more often are sought to be expressed in an abundance of material. Apart from the “instrument of agreement” itself, the page where the parties sign the contract, sometimes produced as a part of the conditions, there will often be appendices including special conditions and schedules of items requiring completion, correspondence attached or incorporated by reference and separate bundles of documents including the contract plans, the specifications and, where applicable, the bills of quantities or schedules of rates.
The abundance of material does not, however, ensure that there will be no dispute or doubt as to the party’s intention or the meaning of the terms. There may, for example, be inconsistencies between similar provisions in different documents or there may be ambiguities in the terms themselves.
Two common types of ambiguities or uncertain terms
There may, for example,
be inconsistencies between similar provisions in different documents
or there may be ambiguities in the terms themselves.
p. 100 PTB
Interpretation of contracts
[5.230]
Where the contract is recorded in written documents, the task of construction of that contract is, fundamentally, to determine the intention of the parties by reference to the words used in those documents, reading them as a whole. The judgment of Allsop P in Franklins Pty Ltd v Metcash Trading Ltd79 provides a comprehensive and detailed discussion of the principles of contract interpretation as they generally apply.
The contract itself may assist with the process of interpretation by any of all of the following types of provisions: definitions of critical words or expressions within the documents themselves (see, for example, section S of the standard form ABIC MW-2018 and cl 1 of AS 4000-1997);80
an order of precedence of the various contractual documents to apply in the event of inconsistencies or ambiguities (see, e.g., cl B2 of ABIC MW-2018); and
provisions for the resolution of discrepancies by the superintendent (see, for example, cl B1 of ABIC MW-2018 and cl 8.1 of AS 4000-1997).
A bridging hint
1. Textbook refers to legal principle and then the authority for such principle whether it is caselaw and or statutory law.
2. The textbook refers to standard form commercial domestic building contracts clauses.
3 The textbook refers to journal articles.
So MUST you
See the following slide which is an extract from page 100 of the prescribed textbook -in three paragraphs the authors refer to 2 cases, and 2 standard form commercial contracts and five clauses from those contracts
Interpretation of contracts
[5.230]
Where the contract is recorded in written documents, the task of construction of that contract is, fundamentally, to determine the intention of the parties by reference to the words used in those documents, reading them as a whole. The judgment of Allsop P in Franklins Pty Ltd v Metcash Trading Ltd79 provides a comprehensive and detailed discussion of the principles of contract interpretation as they generally apply.
The contract itself may assist with the process of interpretation by any of all of the following types of provisions:definitions of critical words or expressions within the documents themselves (see, for example, section S of the standard form ABIC MW-2018 and cl 1 of AS 4000-1997);80
an order of precedence of the various contractual documents to apply in the event of inconsistencies or ambiguities (see, e.g., cl B2 of ABIC MW-2018); and
provisions for the resolution of discrepancies by the superintendent (see, for example, cl B1 of ABIC MW-2018 and cl 8.1 of AS 4000-1997).
The key general principle applicable to construction of contracts is that it seeks to ascertain the objective intention of the parties, that is, the meaning which would be conveyed to a hypothetical “reasonable person” who possesses the background knowledge reasonably available to the parties at the time of entry into the contract, see Maggbury v Hafele.81 This objectively ascertained intention may not necessarily be the same as the parties’ actual intention.
p.100 PTB
The key general principle applicable to construction of contracts is that it seeks to ascertain the objective intention of the parties, that is, the meaning which would be conveyed to a hypothetical “reasonable person” who possesses the background knowledge reasonably available to the parties at the time of entry into the contract, see Maggbury v Hafele.81 This objectively ascertained intention may not necessarily be the same as the parties’ actual intention.
Considerations of the reasonable person
who possesses the background knowledge
reasonably available to the parties
at the time of entry into the contract,
See …. .
See page 100 of the PTB “an order of precedence of the various contractual documents to apply in the event of inconsistencies or ambiguities (see, e.g., cl B2 of ABIC MW-2018);”
The equivalent of clause B1 of ABIC MW -2008 in AS 2124-1992 is clause 8.1
As212-1992
8 CONTRACT DOCUMENTS
8.1 Discrepancies 10
The several documents forming the Contract are to be taken as mutually explanatory of one another. If either party discovers any ambiguity or discrepancy in any document prepared for the purpose of executing the work under the Contract, that party shall notify the Superintendent in writing of the ambiguity or discrepancy. In the event of an
ambiguity or discrepancy being discovered and brought to the attention of the 15
Superintendent, or discovered by the Superintendent, the Superintendent shall direct the
Contractor as to the interpretation to be followed by the Contractor in carrying out the
work.
If the direction causes the Contractor to incur more or less cost than the Contractor could reasonably have anticipated at the time of tendering, the difference shall be valued under 20
Clause 40.5.
If the direction causes the Contractor to incur more or less cost than the Contractor could reasonably have anticipated at the time of tendering, the difference shall be valued under 20
Is the contractor the subjective contractor or is it the objective contractor.
Is there anywhere in AS2124-1992 that describes the contractor in objective terms?
States the contractor not prudent contractor
See PC-1 1998 Clause 1.1
States the contractor not a competent contractor
See ABIC –Mw -1 2008
What about reasonably have anticipated at the time of tendering.
Competent knowledgeable draftsperson therefore subjective
For example, an intended subjective “reasonable” may be construed objectively, and the duties expected of a person providing “supervision” may be much greater than the intended managerial superintendence.
See As2124-1992
Honestly-subjective or objective standard.
Knowledge of the superintendent or knowledge the superintendent should have?
Reasonable?
The equivalent of clause B1 of ABIC MW -2008 and AS 2124-1992 clause 8.1 in PC -1-1998 is clause 6.10. Why not present in chart form?
Domestic buildings are governed by Domestic Building Contracts Act 1995
1 There may be definitions in the Domestic Building Contracts Act.
2 The act may prohibit certain clauses being inserted in domestic building contracts. (See sections 14, 18, 132)
3 The act may provide for mechanisms on what constitutes the contract, and what constitutes variations to the contract.
4. The act may give wide powers to the Tribunal in hearing building disputes to very terms of the domestic contract, declared term of the domestic contract void, and declared term of the domestic building contract unjust
1. Discuss the interpretation aids provided in standard form building contracts.? ( "The contract itself may assist with the process of interpretation by any of all of the following types of provisions") ( 3 marks) Please explain by the use of all relevant authority in the text of your answer and you can refer such as attachments. Research hints
1. The question is standard form building contracts so it clearly covers both domestic and commercial.
2. Construction of a contract and interpretation of a contract are synonyms.
3. To see if there are clauses in the standard form contracts which have headings which can be used as aids in the construction and or interpretation ( the standard form contracts clauses have headings).
4. Look for headings in the index such as ambiguity in documents. ( E.g. see p.49 AS2124-1992)
5. Look for headings in the index such as the determination of the superintendent/administrator/architect .
6. Look to see if any terms of the contract are defined in the contract. ( E.g. see p.15 AS2124-1992) There are definition clauses and some clauses are defined
7. Look for discrepancy or omissions in documents. ( E.g. see p. 52 S2124-1992)
8. Look for order of precedence of documents.* ( E.g. see p.1 of ABIC MW-2008)
9. Consider the role that headings take in the interpretation of the contract. (E.g. see p.7. of
AS2124-1992)
Contract documents may contradict one another.
E.g. the specifications may be contrary to the drawing,
E.g. a discrepancy may exist between figured and scaled dimensions in the drawings
1. Discuss the interpretation aids provided in standard form building contracts.? ( "The contract itself may assist with the process of interpretation by any of all of the following types of provisions") ( 3 marks) Please explain by the use of all relevant authority in the text of your answer and you can refer such as attachments. CONT.
Research hints continued
10. Are there clauses in the contract providing alternatives? ( see p. 7 of AS2124-1992)
1. Discuss the interpretation aids provided in standard form building contracts.? ( "The contract itself may assist with the process of interpretation by any of all of the following types of provisions") ( 3 marks) Please explain by the use of all relevant authority in the text of your answer and you can refer such as attachments
Check list.
1.Have you explained how domestic building contracts are governed by legislation*?
2. Have you referred to the Consumer Law standard form domestic building contract*?
3. Have you provided headings to discuss the interpretation aids in the standard form contracts. Such as
Definition sections. (definitions of critical words)
Clauses in the contract which are defined. NOTE THERE ARE DIFFERENCES IN DEFINATIONS BETWEEN THE CONTRACTS.(expressions within the documents themselves )
A party may be designated to determine ambiguities. (provisions for the resolution of discrepancies by the superintendent )
There may be clauses in the contract which resolve ambiguities.
Where the ambiguity is between conflicting contractual documents. THERE COULD BE PROVISION IN THE CONTRACT FOR RESOLUTION. (an order of precedence of the various contractual documents)
* See next two slides
Look at the standard form domestic building contract put out by the Director of Consumer Affairs Victoria
1 In the definition section there are definitions similar to those used in the Interpretation Acts .
2 The contract refers to definitions used in the Domestic Building Contracts Act 1995
The Federal and Victorian State Interpretation Acts make provision for certain things
Time – with the time begins to run from the beginning or the end of the specified period. That is whether they are included or excluded whether public holidays and/or weekends are included.
Each of the interpretation act defines months as the main calendar month.
Land is defined
May, must and shall are defined.
Service of documents is defined.
It may be that you can argue terms used in the construction contract can be understood by referring to the Interpretation Acts meanings
Look at the standard form domestic building contract put out by the Director of Consumer Affairs Victoria
1. In the definition section there are definitions similar to those used in the interpretation acts .
2 The contract refers to definitions used in the Domestic Building Contracts Act 1995
2. Discuss the key general contract interpretation principles applicable to construction of contracts .(3 marks) Please explain by the use of all relevant authority in the text of your answer and you can refer such as attachments.
There are two general approaches the common law takes to interpreting contracts.
1. The purpose approach which is to consider what an objective person in all the circumstances, would decide.
A reasonable person would consider, the context of the clause, the contract as a whole, the knowledge of the parties.
2. The second approach is the so-called “ maxims” of legal construction. See pages 102 to 103 of the prescribed textbook.
See “Cheshire & Fifoot Law of Contract 10th Australian addition by Sneddon Bigwood and Ellinghaus Page 447
See “Cheshire & Fifoot Law of Contract 10th Australian Edition by Sneddon Bigwood and Ellinghaus Page 449
See “Cheshire & Fifoot Law of Contract 10th Australian Edition by Sneddon Bigwood and Ellinghaus see pages 449 to 450
Taking account of context also requires the particular terms be considered in the light of the text of the contract, and particular phrases in the light of their setting. Cross-references to related terms we made. Related contracts will be taken into account. Informal contracts, recitals and headings will be given due weight. Of course close textual analysis and could resort to dictionaries, will not be is eschewed, but the courts will not ignore the wood for the trees.
Where contract contain terms that are inconsistent with each other, the court must decide which term represents the objective intention of the parties in the circumstances
“Cheshire & Fifoot Law of Contract 10th Australian edition by Sneddon Bigwood and Ellinghaus” See page 451
Where there is an inconsistency between printed provisions forming part of a standard form and provision specially insert in the contract in question, inserted provisions will normally prevail.
Please note that for every proposition put forward in the above textbook the writers footnote case authorities.
See pages 239 to 240 of the prescribed textbook.
For a very good discussion of the general principles applied to construction/interpretation of construction contracts. It could be broken down in the following headings.
1 The objective approach.
2 When drafting the contract consideration should be taken of the general court approach and the maxims or rules of construction.
3. Resolution of internal inconsistencies.
4. Inconsistency between written or typed amendments or special conditions which are incorporated in the contract with the general terms of the contract.
5. Where there has been reference to words struck out of a standard form contract
“Cheshire & Fifoot Law of Contract 10th Australian edition by Sneddon Bigwood and Ellinghaus”
The above textbook is an excellent source also for cases of the maxim of interpretation of contra proferentem
Also see https://www.investopedia.com/terms/c/contra-proferentem-rule.asp
And https://toyourdefence.com/small-claims/breach-of-contract/contra-proferentem
Use of pre-contractual negotiation. Could be written or verbal negotiations
Evidence of pre-contractual negotiations and representations may be admissible in support of extra-contractual remedies including proceedings under the ACL, and evidence of existing facts known to both parties may be admitted as evidence of the surrounding circumstances which may be considered in order to resolve ambiguities or uncertainty as to the parties’ intentions.
82Codelfa Construction Pty Ltd v State Rail Authority NSW (1982) 149 CLR 337.
83Mount Bruce Mining Pty Ltd v Wright Prospecting Pty Ltd (2015) 256 CLR 104.
84B & B Constructions Pty Ltd v Brian A Cheeseman & Associates (1994) 35 NSWLR 227.
85Walker Civil Engineering (Qld) Pty Ltd v FA Pidgeon & Sons Pty Ltd (1986) 3 BCL 345.
86Hide and Skin Trading Pty Ltd v Oceanic Meat Traders Ltd (1990) 20 NSWLR 310.
87FAI Traders Insurance Company Ltd v Savoy Plaza Pty Ltd [1993] 2 VR 343.
88Spunwill Pty Ltd v BAB Pty Ltd (1994) 36 NSWLR 290.
p.100
Where the contract is recorded in written documents, the task of construction of that contract is, fundamentally, to determine the intention of the parties by reference to the words used in those documents, reading them as a whole. The judgment of Allsop P in Franklins Pty Ltd v Metcash Trading Ltd79 provides a comprehensive and detailed discussion of the principles of contract interpretation as they generally apply.
3. What is the role played by the parol evidence rule and the entire contract clause in the construction of contracts? (3 marks) Please explain by the use of all relevant authority in the text of your answer and you can refer such as attachments
The parole evidence rule is that extrinsic evidence is inadmissible to contradict, vary, add or subtract from the term of the deed or any other written documents such as a contract.
The parole evidence rule applies to exclude all forms of extrinsic evidence, not merely evidence of oral communications but evidence of contradictory extrinsic documents which can if admitted as evidence contradict, vary add or subtract from the terms in the contract.
The parole evidence rule also restricts evidence that can be given regarding the interpretation of contract documents.
See page 101 of the prescribed textbook
Thus, the “parol evidence rule” provides that parol or oral testimony is inadmissible to vary, contradict, add to or subtract from the written terms. In turn, evidence of negotiations prior to contract is inadmissible to contradict the language or terms of the contract or as a guide to the parties’ intention, see Codelfa Construction Pty Ltd v State Rail Authority NSW82 and subsequent cases which have considered the issue.
See page 91 of the prescribed textbook
[5.140]
Even where the existence of a contract is not disputed, the definition of the precise terms and their intended effect will often cause problems. A contract may be wholly oral, in which case, if there is a dispute, its terms are determined by evidence as a question of fact. Where the contract has been reduced to writing, it is usually a matter of construction of the terms, with the presumption, known as the “parol evidence rule”, that the agreement is entirely reflected in the written instrument. Sometimes, however – and this often applies in respect of building contracts, especially those using standard forms – the contract document is not a complete record of the agreement, or it fails to record particular statements that were meant to have contractual effect.
If a court is willing to “look outside the four corners” of the written contract to ascertain the agreed intent, it will first be necessary to determine what statements have been made, either orally or in writing. The second step will be to determine which of those statements were intended to have legal effect, and which were merely representations not intended to be part of the contract. It will also be necessary to consider what terms may be implied into the contract, and lastly, what relative importance is to be given to the terms of the contract.
Thus, the “parol evidence rule” provides that parol or oral testimony is inadmissible to vary, contradict, add to or subtract from the written terms. In turn, evidence of negotiations prior to contract is inadmissible to contradict the language or terms of the contract or as a guide to the parties’ intention, see Codelfa Construction Pty Ltd v State Rail Authority NSW82 and subsequent cases which have considered the issue.
See Concise Australian Commercial Law by Turner Trone and Gamble fifth edition SEE pages 146 and 147 for exceptions to leading extrinsic evidence where the contract is wholly written ( parol evidence rule)
“There are numerous exceptions or qualifications to the parol evidence rule that have evolved in order that it is not used to protect parties who have behaved badly (which would be ironical, as the parol evidence rule was created by the courts to protect weaker or vulnerable parties from unfounded allegations that they had made (oral) promises that altered the written agreement and that the stronger party wishes to enforce. For this reason, the court will allow parol evidence that establishes:
the written contract is illegal, invalid or unenforceable;
one or more of the terms has a trade or technical meaning or usage; or
that the oral statement constitutes a collateral contract or warranty that is enforceable (in other words, establishing that the written contract was not the entire agreement and therefore the rule does not apply).
The parol evidence rule and the interpretation of the contract
The parole evidence rule is quite clear that if the contract is entirely written (this is often enforced by there being an entire contract clause) no terms to the contract can be added no terms of the contract can be subtracted and no terms to the contract can be varied.
However evidence will be admitted where a term of the contract is ambiguous. Extrinsic evidence will be admitted to assist in the interpretation of the contract. Evidence can be led to interpret the words used in the contractual document by reference to the context in which the transaction occurred.
Prior discussions between the parties before the contract is executed may be admissible in the cases of ambiguity. See Codelfa Construction Pty Ltd v Rail Authority of New South Wales (1982) 149 CLR 337
Entire agreement clauses
If the contract is part written and part verbal all extrinsic evidence can be led to aid the interpretation of the oral part of the contract.
However there is the proviso that the interpretation of the oral contract cannot contradict the written part of the contract. ( See caselaw authority)
The entire contract clause or merger clauses in a commercial contract is a clause that states that the document contains the entire agreement made by the contracting parties and all other terms are excluded. ( See a standard form contract that has a merger clause)
Such a clause reinforces the parole evidence rule but like the parol evidence rule evidence can be led of misrepresentation, misleading conduct rectification or promissory estoppel.
Also to resole ambiguities in contract terms
and to establish that the written document does not constitute the whole contract
On exceptions to the parol evidence rule
See J W Carter “ The Parol Evidence rule: the law Commission's Conclusions” (1998) 1 JLC 33
Summary of the impact of the parol evidence rule and the interpretation of the contract
The parol evidence rule is that if the contract is entirely written you cannot add vary or subtract any terms of the written contract.
There are a number of exceptions to this rule.
1 You can lead oral evidence that the contract is not entirely in writing but part written in part verbal. Van Den Esschert V Chappel [1960] WAR 114
2. You can lead evidence the term of the contract has a special meaning in the custom for customs and usage of the parties in that sort of trade or enterprise. See Hutton v Warren 150 ER 466.
3. And there are other exceptional circumstances where you can parol evidence where the contract is entirely written.
Scope of the parol evidence rule continued
The the focus of the parol evidence rule is the stop attempts to vary, contradict or addto an entirely written contract.
It may be an oversimplification, but for our purposes, we can accept that you can use evidence outside the contract, ie. extrinsic evidence for the interpretation of an ambiguity of the terms in the contract. It is an attempt to understand terms of the contract not an attempt to vary contradict or add terms of the contract.
The factual matrix and circumstances of the contract are used as evidence of the objective background in the interpretation of contracts
See Toll( FGCT) Pty Ltd v Alphapharm Pty Ltd 219 CLR 165 where the High Court stated in unequivocal terms “ The meaning of the terms of the contractual document is to be determined by what a reasonable person would have understand to mean stop that, normally requires consideration not only of the text, that also the surrounding circumstances known to the parties and the purpose and object of the transaction.”
Discuss the interpretation aids provided in standard form building contracts. Checklist. Marking criteria 1
1. Check you have discussed domestic and commercial building contracts.
2. Discuss how the ambiguities can arise in the contract clauses themselves or differences in the contract documents.
3. Under ambiguities in the contract clauses.
a) discuss general definition clauses.
b) discuss clauses that are defined in the contract and point out the variation of defined clauses between the standard form contracts.
c) discuss the use of headings and subheadings.
d) discuss if there is any provision for someone to resolve ambiguities.
4. Where the ambiguity is because the contract documents are in conflict.
a) discuss if there are any provisions setting out the precedents of documents.
b) discuss if there are any provisions in the contract providing for a resolution between conflicting documents.
c) discuss if there is provision for someone to resolve ambiguities between the documents.
The interpretation of an ambiguous clause in the contract is determined by an objective analysis p1
CHECKLIST FOR MARKING CRITERIA 2
A. The objective analysis will applied.
This is a summary or overview of the considerations that a court will take into account in interpreting an ambiguous clause in the contract
1. An objective analysis of the custom of the industry and what terms mean in that industry .
2. An objective analysis of negotiations between the parties before they enter into the contract-prior contractual negotiations.
3. An objective analysis of the overall parties intention or purpose that the contracting parties seek to gain from the contract.
4. An analysis of what reasonable business person in the position of the parties would have taken the clause to mean.
5 . In professionally drawn contracts, a judicially established meaning of a particular term will normally be used. This is because the court will assume the draughtsperson of the contract intended it to be construed in the established judicial interpretation
6. The court will consider the objective background of the transaction- the common assumptions of the parties, the purpose of the contract and the facts surrounding entering into the contract.
7. Where there is an inconsistency between the printed provisions forming part of the standard form contract and provision specially inserted into the contract the insert provisions will normally prevail over the printed conditions.
Terms in the contract will be read in their context.
A) A particular term will be read in the light of the whole of the contract
B) Cross-referencing will be made against similar terms in the contract.
C) Related contracts will be taken into account.
D) In formal contracts introductions and headings will be taken into account.
8. AS A GENERAL RULE POST CONTRACTUAL BEHAVIOUR OF THE CONTRACTING PARTIES WILL NOT BE TAKEN INTO ACCOUNT.
9. WHAT THE PARTICULAR PARTIES THINK THE TERMS OF THE CONTRACT MEANING WILL NOT BE TAKEN INTO ACCOUNT BECAUSE IS NOT A SUBJECTIVE ANALYSIS THE APPROACH IS AN OBJECTIVE ANALYSIS
THERE IS CASELAW FOR THE ABOVE POINTS.
Also refer to the contract clauses!!!
The interpretation of an ambiguous clause in the contract is determined by an objective analysis p2
You need to summarise and provide some cases for the maxims of interpretation.
A good summary is found on page 102- 103 of the prescribed textbook.
“Maxims” of legal construction
[5.240]
Apart from the general principles referred to above, there are a number of so-called “maxims” of construction which may assist the parties, or a judge or arbitrator called upon to resolve the issue where the precise meaning of a term or a document cannot be discerned even with the assistance of admissible evidence or from an overall view of the document.89 These include the following:
A reasonable meaning is preferable to an unreasonable one: As the High Court explained in Australian Broadcasting Commission v Australasian Performing Right Association,90 given a choice between two possible interpretations, “that will be preferred which will avoid consequences which appear to be capricious, unreasonable, inconvenient or unjust, even though the construction adopted is not the most obvious, or the most grammatically accurate”. This does not apply where alternative interpretations are not possible and cannot be used to mitigate clearly unreasonable terms.91
The ordinary meaning will be given in the context intended: In construing a term of a contract, a court will give to the words used any ordinary, special or technical or trade use that the parties intended unless to do so would be illogical.
A valid meaning is preferable to one that will make the term void: This rule may sometimes lead to the correction of obvious errors in the document by the court and giving definition to loose or general language.
The surrounding words may assist in ascertaining the meaning of a doubtful word: The contract must be construed as a whole, effect being given, so far as practicable, to each of its provisions, that is, the whole may assist the understanding of the part.
Where a class of things is mentioned expressly, other things of the same class not mentioned may be excluded: This rule, sometimes referred to by the Latin phrase inclusio unius est exclusio alterius, will operate where it is not clear what is meant to be included (for example, where an insurance clause requires cover to be effected for certain stated risks, other risks would be excluded).
Where words of a particular class are followed by general words the general words only cover matters or things of the same class (the “ejusdem generis” rule): The rule operates where phrases such as “and any other materials” or “any other cause” are used and restricts the matters which can be interpreted within such phrases to the class of things which immediately precede the general phrase. The rule can be excluded, so that the word “whatsoever”
after the general phrase has excluded the operation of the rule. The use of “(without limitation)” after “including” is a common way of dealing with this.
The contra proferentem rule: The author of, or the party relying on, a clause which is ambiguous will have it construed against them: Described as a rule of last resort, other than in respect of particularly onerous clauses92 and applying only in the event of ambiguities, this rule generally applies against the person who prepared the contract document and wishes to rely upon a term inserted for his or her benefit which is capable of alternative interpretation.
Unfortunately, many construction contracts include words and phraseology which are inconsistent and unclear at best and dangerous at worst. This often results from the proliferation of documents making up the contract and the enthusiasm of those preparing the specifications and other technical documents to cover the field. It is also very important to note the distinction between meanings of words used by architects and engineers, and the meaning given to them by lawyers. For example, an intended subjective “reasonable” may be construed objectively, and the duties expected of a person providing “supervision” may be much greater than the intended managerial superintendence.
Checklist for the parol evidence rule. Marking criteria 3
1. Define the parole evidence rule.
2. Discuss and define entire contract/merger clauses.
3. Provide case law and reference to standard form commercial building contract where entire contract clauses are used.
4 Provide a summary for the exceptions to the parole evidence rule.
5. Provide a discussion on how the parole evidence rule does not, today, inhibit evidence outside the contract (extrinsic evidence) being used to understand the contractual terms. To clarify an ambiguity not to add subtract or vary the terms of the contract.
A reminder
You need to refer to cases in the text of your writing and attach case headnotes and perhaps extracts from leading judgement at the end of your answer.
We are relevant you need to refer to statutory sections in the text of your writing and attach major legislation at the end of your answer.
Of major significance is reference to clauses in the standard form domestic building contract and commercial building contracts I have provided. You will refer to the clauses in the text of your writing and attach at the end of your answer contractual clauses either individually and or in charts.
And perhaps reference journal articles.
