Contract Interpretation: How Courts Read Agreements

Plain Meaning Rule Courts give contract words their ordinary, everyday meaning unless parties clearly intended otherwise. Technical terms get technical meanings. Ambiguity Resolution If language is ambiguous, courts may consider: parties' intent, prior negotiations, industry custom, and course of dealing between parties. Contra Proferentem Ambiguous terms interpreted against the party who drafted the contract. Reason to make your contracts crystal clear. Four Corners Rule Court looks only at contract document itself, not external evidence (with exceptions). Everything important must be in the written agreement. Practical Tips Define key terms, avoid ambiguous language, be specific about obligations, and don't rely on "we both know what this means."

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