CHAPTER 4 INTERPRETATION
LexInter | October 7, 2018 | 0 Comments

CHAPTER 4 INTERPRETATION

CHAPTER 4

INTERPRETATION

Article 4.1 (Intention of the parties)

Article 4.2 (Interpretation of statements and behavior)

Article 4.3 (Relevant circumstances)

Article 4.4 (Coherence of the contract)

Article 4.5 (Useful interpretation)

Article 4.6 (Contra proferentem rule)

Article 4.7 (Linguistic differences)

Article 4.8 (Omissions) 132

RTICLE 4.1

(Intention of the parties)

1) The contract is interpreted according to the common intention of the parties.

2) In the absence of being able to detect the common intention of the parties, the contract is interpreted according to the meaning given to it by a reasonable person of the same quality placed in the same situation.

OMMENTARY

1. Primacy of the common intention of the parties

Paragraph 1 of this article establishes the principle that, in determining the meaning to be given to the clauses of the contract, preference must be given to the common intention of the parties. Consequently, a contractual term may have a different meaning both from the literal meaning of the language used and from the meaning that a reasonable person would give to it, provided that the parties have both given this different meaning when the conclusion of the contract.

The practical importance of the principle should not be overstated, firstly because parties to business transactions are unlikely to use language in a completely different sense from that usually given, and secondly because even if such were to be the case, it would be extremely difficult, in the event of a dispute, to prove that the particular meaning which one of the parties claims to have been the common intention was indeed shared by the other party when the contract was concluded. contract.

2. Recourse to the understanding of a reasonable person

For cases in which the common intention of the parties cannot be detected, paragraph 2 provides that the contract is to be interpreted according to the meaning given to it by a reasonable person of the same quality placed in the same situation. It is not a general and abstract criterion of what is reasonable, but more of the understanding that might reasonably be expected of a person with, for example, the same linguistic knowledge, the same technical competence or the same commercial experience as the parties. .

3. How to establish the common intention of the parties or determine the understanding of a reasonable person

In order to establish whether the parties had a common intention and, if so, which one, it is necessary to take into account all the relevant circumstances of the case, the most important of which are set out in Article 4.3.

The same is true of determining a person’s understanding when the common intention of the parties cannot be established.

4. Interpretation of standard clauses

The “subjective” test in paragraph 1 and the “reasonable” test in paragraph 2 are not always appropriate under the model clauses. Indeed, by virtue of their special nature and purpose, Model Clauses should be interpreted primarily in accordance with what their average users reasonably expect, regardless of the actual understanding that the parties to the contract concerned, or a person. reasonable of the same quality as the parts, might have had.

For the definition of “standard clauses”, see Article 2.1.19 (2).

RTICLE 4.2

(Interpretation of statements and behavior)

1) The statements and behavior of a party are interpreted according to the intention of their author when the other party knew or could not ignore this intention.

2) In the absence of application of the preceding paragraph, they are interpreted according to the meaning that would give a reasonable person of the same quality placed in the same situation.

OMMENTARY

1. Interpretation of unilateral acts

Par analogie avec les critères posés à l’article 4.1 à l’égard de l’ensemble du contrat, le présent article établit qu’il faut, pour l’interprétation des déclarations ou des comportements unilatéraux, donner préférence à l’intention de leur auteur, à condition que l’autre partie ait connu (ou n’ait pu ignorer) cette intention, et que dans tous les autres cas ces déclarations ou comportements s’interprètent selon le sens qu’une personne raisonnable de même qualité placée dans la même situation leur aurait donné.

In practice, the main field of application of this article, which corresponds almost literally to paragraphs 1 and 2 of article 8 CISG, will be that of the formation of contracts when the parties make statements or engage in behavior which the precise legal meaning may need to be established in order to determine whether or not a contract is concluded. However, there are also unilateral acts carried out after the conclusion of the contract which may give rise to problems of interpretation: for example a notification of defective goods, a notification of cancellation or termination of the contract, etc.

2. How to establish the intention of the acting party or determine the understanding of a reasonable person

In applying the “subjective” test in paragraph 1 and the “reasonableness” test in paragraph 2, account must be taken of all the relevant circumstances, the most important of which are contained in Article 4.3.

RTICLE 4.3

(Relevant circumstances)

For the application of Articles 4.1 and 4.2, all the circumstances are taken into account, in particular:

a) preliminary negotiations between the parties;

b) the practices established between the parties;

c) the behavior of the parties after the conclusion of the contract;

d) the nature and purpose of the contract;

e) the meaning generally given to clauses and expressions in the commercial branch

concerned;

f) uses.

OMMENTARY

1. Relevant circumstances in the interpretation process

This article indicates the circumstances to be taken into account for the application of the criteria of articles 4.1 and 4.2. The list only mentions the most important circumstances and is by no means intended to be exhaustive.

2. Comparison between “special” and “general” circumstances

Some circumstances which appear in this article concern the special relationship between the parties concerned, while others are of a more general nature. Although in principle all of the circumstances in the list may be relevant in a given case, the first three are likely to have the most weight in applying the “subjective” test.

I llustrations

1. A contract concluded between A and B, publisher, for the writing of a book, indicates that the book should have “approximately 300 pages”.

During negotiations B asserted to A that an approximate indication of the number of pages was necessary for administrative reasons and that A was not required to stick to exactly that number of pages but could exceed it even substantially if it were. necessary. A submits a 500-page manuscript. In interpreting the meaning to be given to “approximately 300 pages” due account should be taken of the preliminary negotiations. See section 4.3 (a).

2. A, a Canadian manufacturer, and B, a US retailer, enter into a number of contracts for the delivery of optical lenses in which the price is always expressed in Canadian dollars. A made a new offer to B indicating the price in “dollars” without further specification but wishing to refer to Canadian dollars. In the absence of any indication to the contrary, the intention of A shall prevail.

See section 4.3 (b).

Interpretation Art . 4.3

The other circumstances which appear in the list of this article, namely the nature and the purpose of the contract, the meaning generally given to the clauses and the expressions in the commercial branch concerned and the uses, are of primary importance, but not exclusive, in application of the “what is reasonable” test.

The criteria in subparagraphs (e) and (f) may at first glance appear to overlap. There is, however, a difference: while “uses” only apply if they meet the conditions set out in Article 1.9, the “meaning generally given […] in the branch of trade concerned” may be relevant even if it is specific to a branch of commerce to which only one party, or even none, belongs, provided that the expression or clause concerned is typical of that branch of commerce.

I llustrations

3. A and B enter into a contract for the sale of a cargo of oil at a price of US $ 20.5 per barrel. The parties subsequently disagreed on the volume of the barrel in question, A having in mind a 42 standard gallon barrel and B 36 British gallons (“Imperial”). Unless otherwise indicated, the meaning given by A prevails because in the international petroleum trade the practice is to measure barrels in standard gallons.

See section 4.3 (f).

4. A, shipowner, concludes with B a charter contract relating to the transport of cereals and containing a standard clause “whether in berth or not” concerning the beginning of the staries period after entry into the port of destination. When it appears subsequently that the parties attached a different meaning to the clause, it would be appropriate, in the absence of any indication to the contrary, to give preference to the meaning generally given in maritime trade since the clause is typical of this sector. See section 4.3 (e).

3. “Completeness” clauses

Parties to international business transactions frequently include a provision stating that the document reproducing the contract contains the terms they have agreed to. For the effect of so-called “ integrality” or “integration” clauses , in particular if and to what extent they exclude the relevance of preliminary negotiations between the parties, but only within the meaning of interpretation of the contract, see article 2.1.17.

RTICLE 4.4

(Contract consistency)

The clauses and the expressions are interpreted according to the whole of the contract or the declaration in which they appear.

OMMENTARY

1. Interpretation based on the entire contract or on a statement

Clauses and expressions used by one or both parties should obviously not be considered in isolation, but as an integral part of the general context. They should therefore be interpreted in the light of the entire contract or the statement in which they appear.

Drawing

A, the licensee, learns that despite a provision in their contract granting A the exclusivity of the license, B, the licensor, has entered into a similar contract with C, one of the competitors of A. A sends to B a letter complaining of B’s ​​breach and ending with the words “your behavior has clearly demonstrated that we have erred in relying on your professional correctness. We hereby cancel the contract we have concluded with you ”. Despite the use of the term “cancel”, the words of A, interpreted in relation to the entire letter, should be understood as a notice of resolution.

2. There is in principle no hierarchy among the contractual clauses

There is in principle no hierarchy among the contractual clauses, in the sense that their respective importance for the interpretation of the other clauses of the contract is identical regardless of the order in which they appear. However, there are exceptions to this rule.

First, the declarations of intent made in the preamble may or may not be important for the interpretation of the essential clauses of the contract. In the second place, it goes without saying that in the event of conflict the clauses having a specific character prevail over those which lay down more general rules. Finally, the parties can themselves establish a hierarchy among the different clauses or parts of their contract. This is frequent in complex contracts consisting of different documents concerning the legal, economic and technical aspects of the operation.

RTICLE 4.5

(Useful interpretation)

The terms of a contract are interpreted in the sense with which they can all have some effect, rather than in the sense with which some would have none.

OMMENTARY

It is to be expected that the parties, in drafting their contract, do not use words without a specific purpose. It is for this reason that this article lays down the rule that unclear terms of a contract should be interpreted in the sense with which they all may have some effect, rather than in the sense with which some would not. no. However, this rule only comes into play if the clauses in question remain unclear despite the application of the basic rules relating to interpretation set out in Articles 4.1 to 4.3.

Drawing

A, a commercial television network, concludes a contract with B, a film distributor, for the periodic supply of a certain number of films to be broadcast on the A network in the afternoon, these films not being able to be broadcast to all audiences. that at that time.

According to the contract, the films submitted must “have successfully passed the admission test” of the competent censorship committee. A dispute arises between A and B as to the meaning to be attributed to this clause. B argues that it only implies that the films must have obtained permission to broadcast, even if they have been rated X, while A insists that they must have been classified as eligible for all audiences. If it is not otherwise possible to establish the meaning to be given to the clause in question, A’s understanding prevails since B’s interpretation would deprive the provision of any effect.

RTICLE 4.6

(Contra proferentem rule)

In the event of ambiguity, the clauses of a contract are preferably interpreted against the person who proposed them.

OMMENTARY

A party may be responsible for the formulation of a particular clause of the contract either because it has drafted it or because it has proposed it, for example by using model clauses prepared by others. This part must assume the risk of a possible ambiguity in the chosen wording. This is why this article establishes that in the event of ambiguity, the clauses of a contract are preferably interpreted against the person who proposed them. The extent to which this rule applies will depend on the circumstances of the case; the less the provision in question will have been the subject of subsequent negotiations between the parties, the more it will be justified to interpret it against the party which included it in the contract.

Drawing

The contract between A, contractor, and B, for the construction of a factory contains a provision drafted by A but not subsequently discussed, and stating that “[the] contractor is liable and must indemnify the purchaser for all damages, costs and actions relating to any loss or damage to material property (other than the works), death or personal injury caused by the negligence of the contractor, its employees or of its agents ”.

 One of A’s employees handles B’s equipment after hours and damages it. A disclaims all responsibility, arguing that the provision only covers cases in which A’s employees act in the course of their work. In the absence of any indication to the contrary, the provision will be interpreted in the manner least favorable to A, that is to say as also covering the case in which its employees do not act in the course of their work.

RTICLE 4.7

(Linguistic differences)

In the event of a discrepancy between two or more equally authentic language versions, preference is given to the interpretation based on an original version.

OMMENTARY

International trade contracts are often drawn up in two or more versions which may differ on specific points. Sometimes the parties expressly indicate which version wins. While all versions are equally authentic, the question arises as to how to resolve any discrepancies. This article does not lay down a hard and fast rule but simply indicates that preference should be given to the version in which the contract was originally drawn up or, if the contract was drawn up in more than an original version, to one of these versions.

Drawing

1. A and B, neither of them being native English speakers, negotiate and draft a contract in English before translating it into their respective language. The parties decide that the three versions will be equally authentic. In the event of any discrepancies between the texts, the English version will prevail unless otherwise indicated by the circumstances.

A situation in which a different solution may be preferable may arise when the parties have entered into their contract on the basis of widely known international instruments such as INCOTERMS or the Rules and Customs of Documentary Credit . In the event of discrepancies between the different versions used by the parties, it may be preferable to refer to another version if it is clearer than the versions used.

Drawing

2. A contract between a Mexican company and a Swedish company drawn up in three equally authentic versions, Spanish, Swedish and English, contains a reference to the INCOTERMS of 2000. If the French version of the INCOTERMS is clearer than the other three on one point controversial, reference should be made to this version.

RTICLE 4.8

(Omissions)

1) In the absence of agreement between the parties as to a clause which is important for the determination of their rights and obligations, it is supplemented by an appropriate clause.

2) In determining what constitutes an appropriate clause, consideration is given, in particular, to:

(a) the intention of the parties;

b) the nature and purpose of the contract;

c) good faith;

d) what is reasonable.

OMMENTARY

1. Interpret and compensate for omissions

Articles 4.1 to 4.7 deal with the interpretation of contracts in the strict sense, that is to say, the determination of the meaning to be given to contractual clauses which are ambiguous. This article deals with another related point, namely how to make up for an omission.

Omissions or gaps arise when, after the conclusion of the contract, a question arises which the parties have not settled at all in their contract, either because they preferred not to deal with the matter, or simply because they hadn’t foreseen it.

2. When to make up for omissions

In many cases of omissions or gaps in the contract, the Principles will provide a solution to the issue. See for example Articles 5.1.6 (Determination of the quality of the service), 5.1.7 (Fixing the price), 6.1.1 (Time of performance), 6.1.4 (Order of services), 6.1.6 (Place of performance) and 6.1.10 (Currency not specified). See also, in general, Article 5.1.2 relating to implied obligations. However, even where such general supplementary rules exist, they may not be applicable because they would not provide an appropriate solution in the circumstances due to the expectations of the parties or the special nature of the contract. This article then applies.

3. Criteria to compensate for omissions

The clauses introduced by virtue of this article must be appropriate to the circumstances of the case. In order to determine what is appropriate, it is first necessary to take into account the intention of the parties as inferred, inter alia, from clauses expressly included in the contract, from previous negotiations or from any conduct subsequent to the conclusion of the contract. contract.

Drawing

1. The parties to a construction contract decide that the purchaser will pay a special rate of interest in the event of late payment of the price. Before the start of the works, the parties decide to terminate the contract. When the entrepreneur is late in returning the advance payment, the question arises of the applicable interest rate.

In the absence of an express clause relating to this matter, it may be appropriate, having regard to the circumstances, to apply the agreed special rate of interest in the event of late payment of the price by the purchaser also in the event of delay in restitution by the contractor.

If the intention of the parties cannot be established, the clause to be replaced can be determined in accordance with the nature and purpose of the contract, the principle of good faith and what is reasonable.

Drawing

2. A distribution franchise contract provides that the franchisee cannot undertake a similar activity for one year after the end of the contract. Although the contract is silent as to the territorial scope of this prohibition, due to the particular nature of the franchise agreement and its purpose, it is appropriate that the prohibition be limited to the territory in which the franchisee has operated the franchise.

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