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Cover JC Smith's The Law of Contract

12. Interpretation  

This chapter examines approaches to contract interpretation. Interpretation is the exercise by which the meaning of the contract is ascertained. Under the so-called traditional approach to interpretation, where the contractual language chosen was clear and unambiguous, that language was simply given effect. By contrast, under the ‘modern’ approach to interpretation, a much broader range of factors can be taken into account, and courts now appear able to depart from the ‘plain meaning’ of a written document. The modern approach takes into account the ‘matrix of fact’ in which the contract is concluded, including the purpose of the contract. The modern approach has been praised for allowing judges greater flexibility in order to reach a fair result, but criticised for undermining commercial certainty, potentially prejudicing third parties, and intruding into the domain traditionally occupied by the doctrine of rectification.