INTERPRETATION /CONSTRUCTION STEP BY STEP

Interpretation: Determine what parties intended via facts in the K. Construction: Determine what parties intended via law (facts fail to show a terms meaning or existence).

1) Use GENERAL RULES

a) Give words their generally prevailing meaning unless term is technical b) Interpret agreement as a whole c) Interpret agreement in reasonable, lawful, effective way d) Custom-negotiated provisions given more weight than standardized form provisions

1) Interpretation PLAIN MEANING APPROACH (Guilford v. PUC)

a) Step 1: Determine whether the language of the K is, on its face, ambiguous. i) Plain Meaning Rule: Court attempts to discern the usual sense of the words used in the writing, as understood by a reasonable person. b) Step 2: Interpret the language of the K. i) Unambiguous: Obligations of the parties interpreted in accordance with unambiguous meaning. ii) Ambiguous: Contextual evidence required at this point to decide between two countervailing theories advanced by parties for a definition that lacks clear, accepted plain meaning.

2) Interpretation CONTEXTUAL APPROACH (Frigalment)

a) Rule: Interpretation focuses on all circumstances of agreement to define an ambiguous term. b) Evidence Considered: All context/circumstances, but weight follows order: K itself > Conduct/discussions between parties during negotiations > Course of performance > Course of dealing > Trade/custom usage [(1) Must define the trade of market and that both parties are part of it; (2) Usage pertinent to term; (3) Usage exists; and (4) Not inconsistent with express terms of K.]

3) Construction GAP FILLER

a) Definition: A provision legally implied into a K to supplement or clarify its express language. b) Obligation of Best Efforts: When a K does not clearly specify a level of performance but it is clear that the Ks purpose can only be achieved if the obligor puts some energy and dedication into the performance. (Wood v. Lucy)

c) Obligation of Good Faith and Fair Dealing: STD contemplates that the party makes a genuine and sincere effort to build on what has been settled and to attempt to resolve differences. (Saucy)