It is presumed that this statement of Chief Justice Erie does not expressly
states or confirms with the law. Nevertheless, the freedom to contract in the
recent era has been the fetish of our law. A man can make a promise as he deems
fit, and he is only obligated to fulfil the promise he made. Accordingly, a
contract in its true nature has its reliance on the consent between the parties,
hence only bound by the terms which agreed upon by mutual consent. A substantial
proportion of legal disputes between contractual parties emerge due to
contradicting view of terms of the contract expressly made between the parties.
The Contract Lawyers of Dubai with an agenda to explain the readers the
differentiating opinion of contractual terms between parties. In the event of
differentiating opinion regarding the terms of the contract which subsequently
affects the rights and obligations of the parties, the difference shall be
settled by the competent court.
Perhaps, these differences are settled by the court to a large extent by
determining the intention of the parties to the contract and interpreting it
accordingly. In order to drive such opinion courts in UAE usually take the
assistance of Federal Civil Transaction Law, Federal Law 5 of 1985. The starting
and the focal point would be the straightforward reading of the terms of the
contract and to interpret what it says and to construe the intention of the
parties.
Methods of Interpretation
Significantly, there are two different methods for interpreting a particular
contract. The study of internal and external factors driving the contract to
assist in understanding the intention of the parties. Courts can deduce the
intention of the parties through a subjective approach wherein, the terms of the
contract play a vital role. On the other hand, the external factors or acts of
the parties form a part of the objective approach which formulates the meaning
of the contract.
Interpretation in a concerned format differs with the jurisdiction, considering
the tradition of common law countries, the objective approach is often utilized
in ascertaining the intention of the parties compared the actual terms written
in the contract. The primary objective is to draw the real intention of the
parties through a various test such as "reasonably prudent man" standard test.
As said, the external factors play a crucial role when the intention of the
parties cannot be clearly understood from the terms of the contract.
Whereas, in civil law countries like UAE, the courts unequivocally use terms of
the contract as it supersedes the external factors. The written context prevails
external factors. The Civil Transactions Law, under the chapter "Construction of
Contracts" outlays the procedure for applying the subjective test to draw the
intention of the parties signing the contract and accordingly passing the
judgment thereof.
Construction of Contracts
The governing law for contracts entered in UAE provides three instances where
the expressions are any given contract necessitate interpretation. Article 265
and 255 of the Civil Transactions Law distinctly highlights those rules for
construing the real intention of the parties. Below are those three rules:
A. Obvious Expressions
Clear or Unclear! The two possible scenarios in any particular contract, where
you can either construe the real intention or will of the parties through its
very expression or you cannot understand the will of parties through its terms
as it is vague and ambiguous.
The clear intention is when the expression of the contract is simple and
understandable in its entirety, and it matches the true will of the parties, it
is as simple as the people signing the contract, leaving no room for ambiguity.
Thus, necessitating the court to consider the expression of the contract which
does not contradict the law. This is in accordance with Article 258 of the Civil
Transactions Law stating that there shall be no space for interpretation in the
presence of obvious expressions. It has been countlessly approved and affirmed
by UAE courts such as is Court of Cassation Judgment of 280 of 2008 declaring
the wording of the contract simple and obvious and no room for deviation.
The world is neither simple, nor it looks. The real question is when the
expression of the contract is unclear, and it does not represent the real
intention of the parties. A contradicting intention can be witnessed from the
wordings of the contract. In such circumstances, courts may use interpretation
methods notwithstanding the clear wording of the contracts as it opposes to the
intention of the parties. Certainly, the importance shall be given to the clear
and true meaning of the terms anticipated by the parties disregarding the
apparent meaning of the expressions. This is reflected in the Civil Law under
Article 285 which states that the in interpreting the contract the real
intention of parties hold significant importance rather than the syntax.
B. Delphic Expressions
A Delphic statement consists of two primary meanings, each of which gives two
dissenting meanings with the same language. Indeed, such cases require
interpretation as it holds more than one meaning of the same term if read in
conformity with the law and language of the contract. As said and confirmed by
the law by virtue of Article 265, if there is room for construction, the mutual
intention of the parties shall be considered notwithstanding the literal meaning
along with the relation with the nature of the contract and the bona fide
intention of the parties in terms of the contract. Nevertheless, it is pertinent
for the courts to create a distinction between the evidence in context and
extraneous evidence. Where the former is used to construe the ambiguity of the
contract, and the latter cannot be utilized for interpreting the contract. Thus,
intention can only be drawn by the contract itself, and this is also referred to
as parol evidence rule.
C. When in Doubt
Doubt is always in favour of the debtor (Article 266 of the Civil Transactions
Law). The concerned article is in itself is ambiguous and uncertain with regards
to the definition of doubt and debtor. The doubt envisaged in article 266 can
have meaning only is the ambiguity of the contract is not resolved by any other
interpretation method. Thus, this rule works in isolation and the court's last
resort for interpreting the terms of the ambiguous contract. Be the master of
your contract!
One cannot unsign a contract, after signing it. It is hence pertinent for
parties to highlight the actual intention or will beyond a reasonable doubt. The
Lawyers of Dubai have surveyed by way of famous judgments of UAE courts that the
preceding principles and rules are mere guidelines to assist the court in
drawing the intention of the parties and thus not obligatory to follow. Freedom
to contract in the modern world is a blessing in disguise and must be adequately
used to frame the real intention in conformity with the wordings of the
contract.
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