11_Interpretation - Contracts 01 Interpretation PART XI...

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Contracts 01 – Interpretation P ART XI I NTERPRETATION I G ENERAL P RINCIPLES A Objective Interpretation In interpreting contracts, the court aims to determine the objective meaning of the text of the document ( Brambles Holdings ). The court is not trying to ascertain the meaning subjectively attributed to the document by the parties. The evidence available to the court may have a significant effect on the result reached. Prima facie, no extrinsic evidence is allowed to determine the meaning which a reasonable person would ascribe to the terms, unless there is ambiguity. Brambles Holdings v Bathurst City Council: Facts B and BCC entered into another contract The contract did not expressly say that it covered liquid waste Clause 21 specified a fee to be charged for general commercial refuse and domestic refuse and required a portion to be remitted to the council Clause 2(b) defines trade refuse to include liquid refuse (and hence liquid waste) Issue B argued the contract did not apply to liquid waste There was evidence that in 1990/1991 neither BH nor BCC believed the contract related to liquid waste o Subjectively, the evidence suggest neither B nor BCC thought it pertained to liquid waste Reasoning Heydon JA nevertheless found that the contract related to liquid waste: The construction of a contract is an objective question for the court, and the subjective beliefs of the parties are generally irrelevant. The hypothetical view of the reasonable person is preferred to the actual view of the actual parties to ensure that the meaning of contractual terms is sufficiently certain Arguably, this approach overrides the intention of the parties: o Policy response: too much uncertainty would be produced if parties were allowed to argue their own understandings o But there is still a fundamental inconsistency with foundational principles of contract theory o Even so, the objective manifestations of intention are all that the courts have to go on when evaluating evidence o Harm to certainty caused by entertaining subjective beliefs is far greater than the rare case where an objective approach has the effect of overruling them © Jaani Riordan 2004 Page 1 of 12 http://www.jaani.net/
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Contracts 01 – Interpretation Decision Because clause 2(b) relates to liquid refuse in the context of trade waste, clause 21 implies a reference to liquid refuse when referring to commercial waste BCC is entitled to collect the portion of fees for liquid waste owing to it under the contract B Extrinsic Evidence If the words are not ambiguous, whether any extrinsic evidence admissible in interpreting the meaning of a document remains unsettled in Australia. Broadly, two approaches have been adopted in the line of case law dealing with the admission of
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This note was uploaded on 08/17/2010 for the course BUSLAW 730-202 taught by Professor N/a during the Three '07 term at Melbourne Business School.

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11_Interpretation - Contracts 01 Interpretation PART XI...

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