Construction

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Construction is a process by which the court gives meaning and legal effect to ambiguous or uncertain terms of the contract. When construing the terms, a court:

This article is a topic within the subject Contracts.

Required Reading

Paterson, Robertson & Duke, Contract: Cases and Materials (Lawbook Co, 11th ed, 2009), pp. 377-9 [13.05-13.10].

Introduction

[2] Sometimes, the terms of a contract are vague or ambiguous in a certain context. The court then has to 'construe' the terms. Thus, 'construction' means determining the meaning and legal effect of the terms of a contract. Construction is done objectively, which means what would be understood by a reasonable person in the position of the parties.[3]. These issues were discussed in Pacific Carriers v BNP Paribas:

  • Construction of terms is done objectively - what would a reasonable person in this circumstance think.
    • "What is important is not Ms Dhiri's subjective intention, or even what she might have conveyed...to NEAT...The letters of indemnity were, and were intended by NEAT and BNP to be, furnished to Pacific [Plaintiff][4]."
    • "The construction of the letters of indemnity is to be determined by what a reasonable person in the position of Pacific would have understood them to mean[5]."

References

Casebook refers to Paterson, Robertson & Duke, Contract: Cases and Materials (Lawbook Co, 11th ed, 2009).

Textbook refers to Paterson, Robertson & Duke, Principles of Contract Law (Lawbook Co, 3rd ed, 2009).

ACL refers to the Australian Consumer Law.

  1. Pacific Carriers v BNP Paribas (2004) 218 CLR 451, 461, 462
  2. Casebook, p. 377 [13.05], Textbook, p. 243 [13.05]
  3. Brambles Holdings Ltd v Bathurst City Council [2001] 53 NSWLR 153
  4. (2004) 218 CLR 451, 461
  5. (2004) 218 CLR 451, 462
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