Interpretation and Construction in Contract Law
49 Pages Posted: 8 Feb 2017 Last revised: 19 Jan 2018
Date Written: January 19, 2018
Interpretation determines the meaning of a legal actor’s words and actions, construction their legal effect. Although the interpretation-construction distinction has a long pedigree, contract scholars today rarely attend to it, and the relationship between the two activities remains understudied. This Article provides an account of the interplay between interpretation and construction in contract law.
It begins with the history of the concepts, focusing on the works of Lieber, Williston and Corbin. It adopts Corbin’s complimentary conception, according to which interpretation alone never suffices to determine speech act’s legal effects; a rule of construction is always required. The Article departs from Corbin, however, by arguing that contract law recognizes multiple types of meaning, and therefore calls for different types of interpretation. Legally relevant meanings include plain meaning, contextually determined use meaning, subjective and objective meanings, purpose, and the parties’ beliefs and intentions. Which type of meaning is legally relevant when depends on the applicable rule of construction. Consequently, although interpretation comes first in the process of determining parties’ legal obligations, the correct approach to legal interpretation is determined by rules of construction. The Article identifies two additional ways construction can be said to be prior to interpretation in contract law. First, judicial acts of construction can attach to contract boilerplate standard legal effects that depart from the words’ ordinary meaning, turning them into a legal formality. Acts of construction can thereby give boilerplate new semantic meanings, to which interpretation must attend. Second, when parties choose their words in light of their legal effects, rules of construction often figure into their communicative intentions. Rules of construction can therefore also be prior the pragmatic meaning of what parties say and do.
Understanding this complex interplay between interpretation and construction is essential to understanding how the law determines the existence and content of contractual obligations. Although this Article does not argue for one or another rule of interpretation or construction, it lays the groundwork for analyses of which rules are appropriate when.
Keywords: contracts, legal theory, interpretation, construction, plain meaning, parol evidence
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