3: Interpretation and good faith

What are the three protection clauses to a contract, once it is made?

- Entire agreement clauses - NOM-clauses - Non-waiver clauses (conduct)

Give recommendations for interpretation clauses

1) Determine which jurisdictions the contract is governed by -> Clauses must be drafted in relation to proper choice of law and jurisdiction 2) Clauses must be drafted in the light of the anticipated or chosen dispute resolution technique (mediation, arbitration, litigation), 3) Precise use of entire agreement clauses, name the exact documents - remember confidentiality agreements 4) Possible changes in common law towards more liberal interpretation techniques

What is and what is the purpose of a severability clause?

A severability clause allows the rest of an agreement to remain valid, even if one or more provisions are unenforceable or illegal. Severability clauses are inserted to protect the parties against the dramatic consequences that may follow if a whole contract falls through / becomes invalid.

When international contracts are governed by CISG, which article of the CISG regulates the NOM?

CISG art. 29 = a contract in writing, which contains a provision requiring any modification or termination by agreement to be in writing, may not be otherwise modified or terminated by agreement

To sum up: What are the overall take away points regarding the different interpretation clauses?

Characterization clauses = identify the nature of the contract but may attempt to exclude legal rules from being applied. Clauses defining and rankings = provide clarity. Entire agreement clauses = intended to freeze the contract and exclude other documents. Heading clauses = useful for contract management. NOM and Nom-Waiver clauses = avoiding that written contract stipulations become obsolete by another agreement by oral agreement or conduct the parties. Severability clauses = how is an invalid provision to be replaced. However: the precise effect of the clauses must be seen in the context of the applicable law.

Characterization clauses: What is their function - give some examples

Characterization clauses identify the nature of the contract. It is the way we characterize our clauses in the contract. Examples: - Title of contract (sales contract, purchase agreement etc.) - Title of specific contract clauses (sub-headlines) -> This helps the reader, dealing with the contract, and the interpretation.

What is the legal purpose of characterization clauses?

Characterization implies that statutory rules or case law rules for this class of contracts shall apply, e.g. sales = by contractual characterization the parties may opt for bringing contracts within the classifications of the applicable legal system. However, the parties will first be bound by applicable law (e.g. international contracts would be bound by international mandatory rules). Where no mandatory rules are involved, differences of opinions exists whether a characterization by the parties in a contract is binding upon judges or arbitrators.

Which countries have the more strict rules on evidence?

Common law countries. The common law on evidence is different from the law in civil law countries. Rules on evidence are stricter and should be taken into account when analyzing interpretation clauses.

What is Custom, usage, and course of dealing?

Custom, usage, and course of dealing = industry where there is a specific practice, in other words an industry practice. (example: Incoterms)

Explain: How does english contract law interpretation divide itself from the other legal systems? And might there be a change to this in the future?

English law is more predictable than contract law in other systems. However, not necessarily fair results. The parties intend is subordinate to literal interpretation. The UK court will not step aside from clear contract terms to get fair results. But there could be changes on this in the future - case law of the House of Lords, Lord Hofmann held that the meaning of words of a contract is not the same as the meaning that a document would convey to a reasonable man.

Entire agreement clauses should be drafted according to the background law. What does this mean for common law vs. civil law?

Entire agreement clauses should be drafted according to the background law: ⇒ Common law: as a tool to support the parol evidence rule; here all pre-contractual material are important to exclude. ⇒ Civil law: beware that the clause is not intended to be used for gap-filling and to solve ambiguities. The clause will probably be interpreted narrowly.

Non-Waiver Clauses are very similar to entire agreement clauses and NOM-clauses, but: What would happen if one decided to act against (contradictory of) an entire agreement clause and/or NOM-clause, and then later uses this to invoke the non-waiver clause? (What should happen, if one party acts in contravention of these clauses and subsequently invokes the clauses?) Give an example

Example: ▪ Seller A, accepts the buyers notice of non-conformity, although given after 24 hours-term in the contract, based on oral conversation - later invokes the 24-hour time limit with reference to the non-waiver clause. ▪ Then, depending on the national legal systems, there are correction mechanisms based on principles like ''Venire contra factum proprium'' (its not allowed to come against one's own fact) and ''estoppel'' (prevents a person from contradicting an action from the past). ▪ = then the effect of the NOM or entire agreement clauses have to be derogated (fraveget) from.

What is the U.K. interpretation approach?

Focus on freedom of contract and literal interpretation (stick to the wording, and only adjust if absurd results). If the interpretation leads to absurd results, and the contract has to be adjusted, this is not due to objective good faith or reasonableness, but according to a hypothetical party will. Contract supplementation has been based on the doctrine of implied terms, which means that the judges will conclude the parties hypothetical intent - in the judges opinions. Finally, contracts cannot be revised under English law in the case of changed circumstances, which makes it more difficult for one of the parties to perform, except if the restrictive requirements of the doctrine of frustration are met. Keyword: "The hypothecial party will" within the four corners of the contract.

Which countries have the liberal rules on evidence?

France, Belgium and the Netherlands have rules on evidence that are generally quite liberal and will not have a substantial impact on the interpretation clauses. In Italy and Germany, you may restrict the liberal approach to evidence to a certain extent to find the real intention of the parties. · Liberal rules on evidence: o Basically, allow you to bring in whatever evidence you believe can contribute to the parties' intents. o This can be brought into the equation. All this information may or may not contribute to support the parties' intentions. o E.g., emails, appendix, etc. o This is opposite of the restrictive rules on evidence. In international commercial arbitration, recent arbitration laws have introduced liberal rules reg. evidence on issues such as burden of proof, e.g.

Are gap filling clauses usual in international contracts? Why/why not?

Gap filling clauses are barely seen in contracts in general.(but can be seen in severability clauses). The reason behind this is probably because these issues are already dealt with in the applicable national law.

What is the main deciding factor on how interpretation clauses should be viewed?

How interpretation clauses should be viewed is different depending on the legal system.

What are the different contract interpretation models in common law contries vs. civil law contries? (how have they been developed?)

How interpretation clauses should be viewed is different depending on the legal system. ❖ In common law countries, principles of contract interpretation have been developed by case law. ❖ In civil law countries, codified interpretation rules are starting point of the analysis.

What is the starting point of contract interpretation in civil law countries?

In civil law countries, the starting point is the freedom of contract and the subjective intent of the parties (subjective theory). Contracts are formed by the meeting of the parties' minds, and contract interpretation is aimed at discovering what the parties meant when concluding the contract (... or at the least what they would have agreed upon if the problem to be solved had crossed their minds.)

What would a danish court say to a non-waiver clause?

In common law it is rather much more approved to use these clauses than in civil law. Probably it has limited effect in danish courts. Question: How about the Danish system: adfærdsfuldmagt -> dansk ret lægger vægt på adfærd. Udfordring ift. non-waiver som handler om, at det er selve aftalen og ikke adfærden som er afgørende.

What is the US interpretation approach?

Influenced by the countries above (Germanic civil law countries) and have borrowed notions such as good faith and fair dealing. An example of the objective standard under which contracts may be reviewed is UCC section 2-302 (unconscionable contracts or clauses).

Explain language clauses

International contracts = often parties speaking different languages. Language is often decided according to bargaining power. If several language versions of the same contract are made, the question is how discrepancies between the different versions are to be solved. - This situation can be avoided by inserting a priority rule defining the ruling language in case of discrepancy. - However, the most diplomatic solution is to state the equality of the parties and the language versions, and that one of the language versions will prevail only in case of discrepancy.

Why have interpretation clauses developed in practice?

Interpretation clauses have developed in practice because the laws on interpretation in many jurisdictions are not mandatory. P. 120.

How does evidence play a role in contract interpretation?

Interpretation of contracts also involves problems om evidence. The issue that arises is whether and to what extent contracting parties may prove the contents of their contract by relying on written evidence other than the written contract.

Is the parol evidence rule an interpretation rule or an evidence rule?

Is seen both as an interpretation rule and evidence rule.

What are the benefits of the civil law approach on interpretation?

LIBERAL approach! · Flexibility allows to bring in more elements. · High possibility working out what the parties intended. In other words: Shorter contracts - easier to fill out gaps by using background law. Fair and reasonable results as interpreted by the courts --> the courts are more active in helping to find the most reasonable result.

What are the benefits of the common law approach on interpretation?

LITERAL approach! · High predictability of the result of the conflict. · Rights and obligations are as you find them in the contract There are only the rights/obligations that is set in the contract - this gives you more certainty in interpreting and understanding the contract. This consists of a more literal approach, that only focuses on the document.

What is the legal function of definition clauses? And what advice can be given regarding these?

Legal function and advice: - Strengthens contract concistency, avoids repetition in key concepts - Should not contain rights and obligations of parties - Focus on essistential contract elements in need of definition - Consider whether strict defintions and/or some flexibility is needed A good way to draft the definition is to insert: E.g.: "unless the context otherwise requires..."

Explain the mixed interpretation theory

Mixed theory: a mix of the two above. The subjective will start first, but the objective test will take over, if no subjective test gives a result. ---- (In other words: If the common intention (subjective theory) can be established, that interpretation will prevail. Objective interpretation will come into play if and to the extent that the common intention cannot be determined, but then there is no longer any room for what the parties might have intended have they envisaged the problem. In other words: If it is not possible to identify the subjective intention, they use the objective model.)

What is the Swiss interpretation approach?

Mixture of subjective and objective models. First you will start with the intentions of the parties (subjective), and then (if no clear common intention was established) objective standards will be applied. The objective test will be based on good faith and fair dealings, as the court think it should be seen as against custom, usage etc. (= what would the reasonable man have done?) o Swiss law is often used as background law in Denmark. § Why? Because Swiss law is very similar to Danish law. § Also, Switzerland is a neutral country.

What is the purpose of non-waiver clauses?

Non-waiver clause helps to prevent the parties from waiving their contractual rights through their actions. In other words: non-waiver clauses ensure that the terms and conditions of an agreement can't be modified by just the actions of the parties. ⇒ Like e.g. ''no waiver of any provision of this agreement will be valid unless in writing and signed by the person against whom such waiver is sought to be enforced (...)'' o Here mixed with a NOM-clause.

What is recommendable that you combine the non-waiver clause with in order to enhance the effectiveness?

Non-waiver clauses can for the best effect, be tied well together with NOM clauses and entire agreement clauses. ⇒ Like e.g. ''Entire agreement, Waiver. This agreement, including XX constitutes the entire agreement between the parties. Except as expressly provided in this agreement, no amendment, waiver or termination of this agreement shall be binding unless executed in writing by each party to be bound thereof. ''

What are clauses on good faith and fair dealing?

Not seen as frequently because of contracts drafters' tendency to not repeat statutory principles of contract interpretation. But in some contracts parties refers to good faith and fair dealings as objective standards for contract interpretation. · The clauses put emphasis on the need for mutual cooperation and consideration for the interests of the other party. · Can also focus on the spirit of the contract and the need for the parties to act in accordance with that spirit. · Other clauses impose a general duty of good faith and fair dealing regarding the performance of the obligation.

Explain the objective interpretation theory

Objective theory: interpretation is the process of determining the rights and obligations of the parties, primarily if there are ambiguities, contradictions or gaps within the contents of the contract. This process takes place based on a number of factors such as: - Good faith and fair dealing, - State of the art, - Trade usages, - Course of dealing or industry standards, including but not limited to the parties' common intentions.

What is the purpose of contract definition clauses and ranking clauses?

Overall: Provides clarity

Regarding exclusion of pre-contractual documents: What does the case Proforce Recruit Limited v. The Rugby Group Limited illustrate?

Proforce Recruit Limited v. The Rugby Group Limited case: "preferred supplier status" could only be determined by looking at surrounding circumstances", entire agreement clause intended to exclude content but not (definition of) term, pre-contractual negotiations --> "wider basis" The pre-contractual negotiations could be used in interpreting the preferred supplier clause Take note of what's said by lord Justice Mummery - the case here is to understand the meaning of term, and this term has no ordinary meaning - so it's only possible to understand its meaning, you can open op.

What are the three different interpretation theories?

Subjective, objective, mixed

Explain how the application of the Parol Evidence Rule differs from English law to US law

The application of the rule is different from English law than US law. In England you're able to prove, that the document is not the entire agreement e.g., but the courts in the US are more divided (some are stricter - if they interpret the entire agreement clause to be very strict, they will not even let you try to prove that there could be other parts to the entire agreement between the parties).

What is the conclusion from the Working Group regarding characterization clauses?

The conclusion from the Working Group was that a contractual characterization is not decisive and is not binding if it does not correspond to the essential facts of the contract.

What is the contractual content upon which the parties have agreed?

The contract is always the starting point.

What are the three types of evidence rules and what are they linked to?

The evidence rules are linked to the interpretation approach. 1. Liberal rules on evidence 2. More strict rules on evidence 3. Strict rules on evidence - "Parol evidence rule"

Where is the parol evidence rule more strict in common law contries? What does the parol evidence rule mean?

The parol evidence rule is most strict in the US (American law), more flexible in UK (English law). o Defintion: In written document which is intended to be the entire contract between the parties, you may not add to, vary, or contradict, but may explain or clarify ambiguities. o The "parol evidence rule" is a common law rule that prevents from presenting extrinsic evidence (udefrakommende beviser). § Once a contract is completed, this is the basis of the interpretation. § What is extrinsic evidence? Facts and information, which is not embodied in the contract (In other words: evidence which you cannot find in the contract). § This rule prevents a party from presenting evidence, that is NOT tied to the contract. E.g., emails prior to the signing of the contract. This can NOT be presented in a court. § You can still present evidence, which is tied to the contract, e.g., schedules, appendices, etc.

What is the purpose of interpretation rules and how does background law vs. interpretation play into that purpose?

The purpose of interpretation rules is generally to give rules for interpreting the rights and obligations of the parties to the contract. · Background law: In the absence of any agreement the law provides protection for certain confidential information. E.g., criminal law often protects professional secret and industrial secrets. · Interpretation clause: But in many cases the applicable law does not provide enough protection and practitioners therefore look to include specific clauses in the contract Danish judges will try to fill the clauses (if needed), in the contract with the principle: ''det mindre i det mere''.

What is a good advice regarding a severability clause - what should it be supplemented with?

The severability clause should be supplemented with a provision regarding the problem of filling the gap created by the disappearance of the annulled clause: ⇒ The contract could continue without the annulled clause, or ⇒ The clause should be replaced with a valid clause instead. Anyhow the clause should consist of either a procedure to supplement or to replace and insert new contract terms, including the duty to re-negotiate. (in many ways similar to the mechanism often used in hardship situations).

Which considerations are the use of interpretation clauses subject to?

The use of interpretation clauses is subject to the following considerations: ▪ Overall perspective including their various elements. ▪ Contract. (starting point for ITPT, but hardly helpful at all) ▪ Context. (which type of contract, structure of the contract) ▪ Applicable law. (e.g. "gross negligence", what is meant by this? The answer is, that it depends on the applicable law.) ▪ Factual background of the circumstances which triggers their use. ▪ Boilerplate clauses. - The clauses can to a certain extent be standardized with similar content and wordings (copied from one contract to another), and often characterized as boilerplate clauses. (⇒ This may be explained by the fact that interpretation clauses are much less tailor-made than some other contract clauses that are related to the core of the contract.) To fully understand interpretation clauses, one should seek an overall perspective including the above-mentioned various elements.

Explain the differences between mediation, arbitration and court litigation regarding how this may play a role for the contract interpretation

The way we resolve a dispute may play a role for the contract interpretation. · Mediation: o Often based on contract law rules. o The amicable settlement of the dispute governs = The parties may depart from contract law rules in order to terminate a dispute on the basis of the terms of the settlement on which they agree. · Arbitration (ad hoc or institutional): (an independent person officially appointed to settle a dispute); o Particularly in international commercial arbitration, legal standards control. o Strict application of contract clauses in e.g., London (will not derogate from contractual provisions on the basis of fairness), but perhaps otherwise in a Swiss amiable composition arbitration. ▪ Amiable composition def.: power given by the parties to the arbitrators to seek an equitable (fair) solution to their dispute, by setting aside, if necessary the rule of law, which would otherwise be applicable or the strict application of the contract. · Court Litigation (public courts): § This is less flexible than arbitration. In court proceedings, the parties do not have the opportunity to choose which procedure will apply or who will judge - these rules are prescribed by law.

Substantive contract law: Can the way a conflict is resolved affect the contract interpretation?

The way we resolve the conflicts (dispute settlement methods chosen by the parties) may influence and play a role in reg. to contract interpretation.

What does the ranking clauses do?

They rank the various contractual documents. Is particularly relevant to avoid contradiction between the numerous contract documents and determines the priority order of the contractual documents. · What takes precedence if there is contradiction between documents? This is solved, by applying ranking clauses to the contract. · E.g., Master agreement, general conditions, annexes, schedules, price lists, etc. · Addendums are adjustments to the Master Agreement. Therefore, the latest addendum has to be the one that takes precedence.

How can you strengthen the effectiveness of the NOM clause (which clauses should it be combined with)?

To strengthen the effectiveness of the NOM clauses, these should be combined with a non-waiver clause and a burden of proof clause (evidence clause - under which a party, invoking waiver by agreement or conduct, has the burden of proof).

Why do contracting parties use headings preceding their contract articles?

Useful for contract management! Summarize contract provisions and are repeated in table of contents = user friendly. Headings may help in interpreting contracts, BUT they should not have decisive weight in contract interpretation (attitude towards not giving them any legal value), but they can be used for interpretive purposes. Should primarily be for reference purposes. ⇒ Example of preferred clause: ''captions and headings. The section and paragraph captions and headings contained in this agreement are for included reference purposes only and shall not affect in any way the meaning or interpretation of this agreement.''

What are the effect of good faith and fair dealing clauses according to civil law vs. common law countries?

Usually has a very limited effect in connection to interpretation, however, can play a rule if you define which statutory law that should apply, and which jurisdiction that should apply. ⇒ Civil law countries = limited effect as this apply anyway. ⇒ Common law countries = limited effect, e.g. in England you still have the ''you are your own luck'' approach. But there may be a change to this...

The effect of non-waiver clauses is to be tested against the applicable national law. What are the chances a non-waiver clause would be upheld in civil law vs. common law?

Very often, the wording of the non-waiver clause has no effect in certain civil law jurisdictions, but will generally be enforced in countries with a literal-subjective approach to interpretation (UK, France) Therefore, choose applicable law very carefully.

Interpretation models: What plays an important role other than substantive background contract law?

With regard to interpretation models, not only the substantive background contract law but also evidence issues (procedural law) may play an important role when looking into the above topics.

How are the gaps in the contractual regulation dealt with? (what is the procedure for gap-filling?)

You cannot cover everything in the contract. o E.g., a sales agreement with the price, but you forget to identify the currency that applies. This is a very major gap. How do we deal with that gap? If you didn't deal with it in the contract, what do you do? o The procedure regarding filling out gaps: § Step 1: Well, firstly you read the whole contract, because maybe you can find things to support you conclusion. § Step 2: If not, then you look at background law. § Step 3: Again, if you don't find the support here, you look at case law.

Explain the subjective interpretation theory

interpretation is the process whereby the common intention of the parties is determined.

Are contracts immutable (uforanderlige) or adaptable in case of changed circumstances?

o Circumstances change, and they change fast. o In the last five years there has both been the COVID-19 pandemic and a war in Ukraine. o The answer is that there has to be a balance: § When you sign up to the contract, the starting point is always, the terms and condition can only be changed, subject to mutual agreement. § Any exception to that depends on what you have put in the contract.

Draft entire agreement clauses in which the function of the clause is clear. A whole range of documents are or should be excluded in order to keep the present and actual written document as number 1 (but seldom are all the following elements listed). What should you consider to exclude in the Entire Agreement Clause? Give examples

o Exclusion of simulation (exclude the application of the theory of simulation; excluding side-letters) o Exclusion of previous contracts (exclude previous contracts, which are still in force from the scope of the parties' obligations) o Exclusion of precontractual documents (what about an NDA? - exception) o Exclusion of written or oral representations o Exclusion of general conditions: blocking clauses o Exclusion of future contracts

What is the interpretation approach of the Netherlands?

o Good faith (subjective approach) + reasonableness and fairness.

What is the German interpretation approach?

o Have the most active courts in interpreting contracts. o But the test of the subjective intention is actually objective (what would the good and prudent buyer/seller have agreed). = Good faith and fair dealings may directly take the effect out of contract clauses, even if they are clear. o Contracts can be adjusted according to the circumstances by courts as a result of a significant change in the circumstances that originally led to the conclusion of the contract. (This is similar to the Danish Contracts Act art. 36). § Disadvantage: Can you rely on your contract when the court can adjust provisions. § Advantage: The interpretation is based on good faith and fair dealings.

What is the interpretation approach in Belgium, Italy, Spain, Portugal and Brazil?

o More or less same approach as France. o OBS! It is not a geographical thing but down to the interpretation principles.

What is the French interpretation approach?

o The French interpretation approach is the subjective approach. o This means that the courts can interfere, they can go in and adjust contract clauses (which can be different from other countries, where a court can maybe only accept or invalidate a contract). This is the same principle in Denmark. o The strict application of contract clauses must step aside if the common intention show otherwise, and other obligations can be interpreted into the contract if not mentioned, as according to statute, custom and fair dealing. o E.g., obligations to warn, inform, collaborate, implied warranties.

What are Entire Agreement Clauses and what is their function? Mention example

· A clause that freeze the contract in its written form. (be careful not to use too vague and general language). - In other words: we make it clear, what the agreement is based on. ⇒ e.g.: ''this contract, including all the schedules attached hereto which represent an integral part hereof and have been signed by the parties, constitutes the entire agreement between the parties.''

Explain in more detail what the contract definition clauses helps with

· Define the documents in which the contractual rights and obligations of the parties are contained. ⇒ Like e.g.: ''this agreement shall mean this present document and all annexes and other documents referred to herein (...).

Which categories can contract law be divided into?

· Formation rules · Interpretation rules (our focus today) · Validity rules · Question of authority

How does common law vs. civil law deal with gap filling clauses?

· Generally, the gap filling clauses will be enforced in most jurisdictions. However, the states that are following the objective theory may put more wight on notions of good faith and fair dealing. ⇒ Civil law countries: o Entire agreement clauses as gapfillers in civil law countries = you should not put too much weight on entire agreement clauses as gap-filling clauses. These should be interpreted restrictively - in any case of doubt, they should not be held to address the issue of gap filing. o recommendation -> clarify, that gap-filling should still be allowed even if entire agreement clause applies. ⇒ Common law countries o would more often allow gap-filling in these cases, where entire agreement clauses are used as gap-filling clauses.

In which jurisdictions are severability clauses most useful? And why?

· Many jurisdictions have already statutory law or case law rules on partial invalidity that attempt to solve these problems. · Severability clauses are most useful in relation to international commercial contracts governed by the law of a jurisdiction without firm statutory or case law rules regarding partial invalidity. o In those jurisdictions, severability clauses are clear indications that the parties wanted to save the complete contract from invalidity. o The use of a severability clause makes sure that a single clause is not an essential element of the contract or can be severed from the other clause.

In what situations may the severability clause not have any effect?

· May not have any effect if judges decide the entire contract should fall.

Will Custom, usage, and course of dealing clauses be effective?

· Not so ordinary but is enforceable. · However: Objective theory will only use them indirectly and subject to good faith (this means that these clauses will eventually be preempted by principles of good faith and fair dealing).

What is the purpose of a NOM-clause? And what clauses do they complement?

· The purpose is to shield against contract variation. (forces the parties to record amendments into their contract). · Complements entire agreement clause: If the parties do not see any need to insert an entire agreement clause into their contract, NOM-clauses may still be very useful in order to force the parties to record amendments in writing.

What is a no partnership Clause?

· This is also a boilerplate clause. · This is a provision directed to the interpreter of the contract. Although we are signing up to a contract, this does not establish a partnership between us (and therefore does not allow one party to represent the other).

What are the effect of NOM in civil law (subjective/objective approach) vs. common law (subjective)?

⇒ Civil law countries o Under the subjective theory of interpretation (France and Belgium), NOM-clauses seem to be binding unless it can clearly be shown that parties have renounced it. o Under the objective theory of interpretation (Germany and The Netherlands) it will be more easily accepted that one party waived its right to invoke the NOM-clause by agreement or by conduct. ⇒ Common law countries: o A contract containing a NOM-clause cannot by modified orally. Changes to the contract can only be made in writing. o Subjective and literal approach to these types of clauses, and the clauses will be upheld. To sum up: Under the subjective theory and the literal system of interpretation, NOM-clauses seem to be binding, whereas, under the objective theory this cannot be guaranteed.

How could we characterize the Danish interpretation tradition?

⇒ In Denmark we have moved from a subjective bonus pater to an objective bonus pater, in Danish tort law. o In the subjective bonus pater standard: what should I have seen? o In the objective bonus pater standard: what should a ''normal'' person have done in this case? ⇒ In Denmark we are in general quite pragmatic and doing a mix of objective and subjective interpretations.

On a worldwide scale, CISG should be taken into account: Explain CISG art. 8, sec. 2 and 3

▪ CISG art. 8, section 2: objective bonus pater = ''according to the understanding that a reasonable person of the same kind as the other party would have had in the same circumstances.'' ▪ CISG art. 8, section 3: this section is one of the main reasons, England is not a part of CISG. In UK, the English court doesn't care what an objective person would understand from the agreement. They only care about what is technically stated in the contract = when they interpret and understand the intent in the contract, the intent is what is written in the contract.

Which clauses are often inserted into the contract to avoid misunderstanding regarding the parol evidence rule?

▪ Parties often insert ''entire agreement clauses'' into the contract, to avoid misunderstandings as to whether or not it was intended to be the entire agreement. o The entire agreement clause is an indicator to the court, that the contract is not to be interpreted. The intention was to only look at the contract, they intend for the contract to be the final literal agreement. o An entire agreement clause establishes that the contract in writing expresses their entire agreement. (⇒ NB. ''Entire agreement clauses'' is often seen in England, while US contracts often consists of ''integration clauses'' or ''merger clauses''. o These clauses provide for complete integration of prior and simultaneous agreements and thereby attempts to make evidence of additional and contradicting terms non-essential.)

Noter til sagen Proforce Recruit Limited v. The Rugby Group Limited (til at læse igennem)

▪ When the contract was drafted between the parties, thay added a ''prefered supplier clause''. The idea behind this is, that if they give a good cleaning service to a good price, that party is the prefered if needed in other instances. ▪ The party A agreed with another cleaning company C (while beeing in agreement with the other B). Party B mentioned that there was a clause in the agreement, but Party A said that this was only relevant for the extactly the same situaiton, which was not the case. ▪ The question is, do you have to pay damage? do you have to negotiate with the supplier B? ▪ The high court applied the traditional court of English Law to which pre-contractual negotiations are NOT admissible as evidence in interpreting a written contract and accepted Party A's motion. ▪ The supreme court overruled this decision and, holding that pre-contractual negotiations could be used in interpreting the preferred supplier clause, dismissed the costumer (party A)'s motion for summary judgment and deferred that case to trial for further findings of fact concerning the meaning the parties intended to attach the expression in question in the course of pre-contractual negotiations. ▪ Take note of what's said by lord Justice Mummery - the case here is to understand the meaning of term, and this term has no ordinary meaning - so it's only possible to understand its meaning, you can open op. ▪ And lady Justice Arden's comment on the next page: she went even further and openly states that consideration should be given to the possibility of admitting in the future evidence of pre-contractual negotiations in interpretation questions on a wider basis than the law presently permits.