Construction of terms

The rules of construction and contractual interpretation are subject to the parol evidence rule in the sense that a court will exclude extrinsic evidence that would have assisted the court in interpreting the contract. This relates primarily to evidence of pre-contractual negotiations and post-contractual conduct. Again, courts will recognise some exceptional situations. The main rules of construction relate to the use of an objective approach to ascertain the intention of the parties, and the treatment of ambiguities and inconsistencies.

The interpretation of terms that exclude or limit liability is governed by rules to determine the ordinary and natural meaning of the words used and the nature of the limitation or exclusion in light of the intention of the parties and the scope of the contract as a whole. It must also be kept in mind that terms dealing with the liability of the parties must be interpreted in light of any statutory prohibitions to exclude or limit liability of a party such as the Australian Consumer Law.

See Construction of terms.