Contracts 1 PASS Week 12 Revision

What are some general principles for construction of terms?

• The courts will objectively determine the meaning

• Effect will be given to the intention of the parties wherever possible

• The courts will enforce agreements where possible, to uphold the contractual obligations

• The parties' intention must be ascertained, on legal principles of construction, from the words they have used

Where should you start with the construction of terms?

• Interpret the words used by the plaintiff according to their plain and ordinary meaning

• Interpret the words used by the defendant according to their plain and ordinary meaning

• Interpret the words used by the parties according to their plain and ordinary meaning

The courts will interpret the literal construction of the words of contract and enforce these words, even in cases of absurdity

• True

• False

When the literal meaning creates an ambiguity, in the construction of terms, the court will

• Consider a reasonable interpretation in the circumstances

• Construe the clause contra proferentem - strictly against the party for whose benefit the clause is inserted

• Consider the most reasonable interpretation in the circumstances

• Consider the surrounding circumstances

What is the "true rule"?

• The true rule is that evidence of surrounding circumstances is admissible to assist the interpretation of the contract if the language is ambiguous or susceptible to more than one meaning. But it is not admissible to contradict the contract when it has a plain meaning

• The true rule is that evidence of surrounding circumstances is admissible to assist the interpretation of the contract if the language is ambiguous or susceptible to more than one meaning. But it is admissible to contradict the contract when it has a plain meaning

Promissory clauses are terms where a party promises or undertakes to do, or not do

Conditions are the most essential terms because...

• The promisee would not have entered into the contract 'but for' an assurance of the 'strict or substantial performance of the promise'

• The promisor would not have entered into the contract 'but for' an assurance of the 'strict or substantial performance of the promise'

• The parties would not have entered into the contract 'but for' an assurance of the 'strict or substantial performance of the promise'

A breach of a warranty can result in an order for damages but not a right to terminate the contract

• True

• False

If the intermediate term has been breached in circumstances it goes without saying that the contract is at an end, so the contract can be terminated

• True

• False

With contingency clauses, the condition precedent indicates...

• The contract will not be binding and enforceable unless and until the specified event occurs

• The contract will be binding and enforceable before the specified event occurs