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Interpretation defn
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interpretation is ascertaining the meanings of the parties, then determining the legal effect of the words used
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Interpretation 3 steps
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Step 1: Identify all possible meanings of the language
Step 2: Characterize each meaning as a type (or types) of usage
Step 3: select a meaning
Step 4: Construction - after you decide the meaning of the term, try to figure out its legal effect
AT EVERY STEP IN THE PROCESS THINK ABOUT POLICY
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Step 1
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Identify all possible meanings
i. Use intrinsic aids: text and context, "four corners"
ii. Use extrinsic aids: preliminary negotiations, trade usages at time of contracting, subsequent conduct
iii. Theories of interpretation
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Theories of interpretation (1)
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Objective approach(Williston) -plain meaning)
a. Consult text and context (and dictionary) and apply the maxims of interpretation based on the face of the writing
b. Determine possible meanings
i. If there is a plain meaning select it
ii. If and only if no plain meaning consult extrinsic materials
c. Policy: to promote stability and certainty; easiest for attorneys to advise clients
d. Criticism: often a judge must consider the extrinsic evidence to see that there was an ambiguity (Peerless)
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Theories of interpretation (2)
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Modified objective approach (majority view)
a. Consult text, context, and relevant business custom and apply the maxims of interpretation
b. Determine possible meanings
i. if there is a plain meaning, select it
ii. if there is no plain meaning, consult other extrinsic materials
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Theories of interpretation (3)
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UCC approach
a. Consult text, context, trade usage, and mutual usage of course of prior dealings or course of performance and apply the maxims of interpretation (UCC 1-303)
b. Determine possible meanings
i. if there is a plain meaning, select it.
ii. no plain meaning, consult additional extrinsic materials
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Theories of interpretation (4)
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Subjective approach (Corbin)(Traynor)
a. consult text, context, and any extrinsic materials probative of a meaning to which the text is reasonably susceptible and apply the maxims of interpretation
b. determine all possible meanings
c. if you admit extrinsic evidence, submit the issue to the jury with appropriate restrictions on #2 and #3
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Step 2
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Characterize each meaning as a type of usage
1. General/popular - dictionary meaning; meaning the average lay person would use
2. Limited
a. Trade usage or regional usage
i. Majority view - understood by majority of industry
ii. Minority view (CL)-virtually universal usage
b. proponent must:
1) establish the usage's existence
2) show that the other party had actual or constructive notice
3. Mutual
a. Meaning both contracting parties actually chose or had in mind at K formation
b. Evidenced by course of performance and course of prior dealings, or a simple conversation before or at the signing of the K
4. Individual - meaning that one of the parties actually chose
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Step 3
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Choose a meaning
1. Primary basis
a. Willison
1. Mutual (if K contains a glossary or mutual usage is otherwise reflected on the face of the K)
2. Limtied, grudgingly
3. General
4. Mutual w/o glossary
5. Individual
b. Corbin
1. Mutual
2. Limited
3. General
4. Individual
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Step 3 part 2
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Secondary basis: maxims of interpretation
a. Give language a reasonable interpretation
b. Consider circumstances surrounding the K's execution
c. Consider the transaction as a whole
d. Give language a lawful interpretation
e. Make all parts of the contract effective
f. Contra proferentem - interpret against draftsman
g. Select meaning that favors the public interest
h. Consider the parties' subsequent conduct (practical construction)
i. Expresio unius est exclusio alterius - express inclusion of one is the implied exclusion of the other
j. Ejusdem generis - general langauge includes things of same general character
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Step 4
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Construe the legal effect of the provision
1. Recital of fact
2. Duty
3. Condition
4. Promissory condition (both condition and a duty)
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