united-states contract-law
Does how a court interpret a contract depend on whether it&#39;s a layman or expert who wrote the contract?
<p>The title sort of says it all, I'm wondering if a contract would be read differently or more literally if written, or signed, by a trained lawyer then if it was done by layman.</p>
<p>So let's say that I sign a contract with someone that has an ambiguous statement in it, one where strict reading of the words as written would imply X, but from context, it seems likely that the statement was actually meant to imply Y instead.  For now, let's say I am arguing I read the contract as meaning X when I signed it, and the writer of the contract is trying to argue they meant Y.</p>
<p>As I understand it whether the contract is read as meaning X or Y is enforceable is dependent on what is the most reasonable reading.  If it takes an excessively literal reading to get X, and any sane person would infer Y then Y is what is enforceable.  If a sane person would instead likely view X as being the intent, then X is what is enforceable even if Y was what the writer had intended.</p>
<p>But what if it's ambiguous which reading is most reasonable, would it matter rather the writer of the contract was a trained lawyer, or a layman like me?  Could I argue that a the writer was a lawyer and should know how to write a contract and so they should have understood the literal interpretation of the clause was X and thus has no legal grounds for claiming they meant Y?  If instead the writer was another layman, would they be more likely to be able to argue they meant the obvious interpretation Y and that literal reading X was just bad writing of someone who didn't know what they were doing?</p>
<p>The same argument could be made in reverse as well, if instead I wrote the contract and had meant literal interpretation X and the signer claims they thought the contract meant 'reasonable' interpretation Y, would the signer being or not being a lawyer affect rather I can claim they should reasonable have believed X was intended?</p>

<p>It doesn't matter.  When a contract is left ambiguous the interpretation that is used is the one that is the most favorable to the party that did not draft the contract, under the logic that if the party that did draft the contract chose all the wording and thus, they could have stated their interpretation in the contract just avoided this whole mess in the first place.</p>
<p>A similar rule exists in criminal law, where if the law is ambiguous, the interpretation used is the one most favorable to the defendant, since the state could have drafted it in a way that made their interpretation clear.</p>

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<p>Contractual interpretation is conducted in light of the surrounding circumstances. See <em>Sattva Capital Corp. v. Creston Moly Corp.</em>, 2014 SCC 33, para. 58 (citations omitted):</p>
<blockquote>
<p>The nature of the evidence that can be relied upon under the rubric of “surrounding circumstances” will necessarily vary from case to case.  It does, however, have its limits. It should consist only of objective evidence of the background facts at the time of the execution of the contract, that is, knowledge that was or reasonably ought to have been within the knowledge of both parties at or before the date of contracting. Subject to these requirements and the parol evidence rule discussed below, this includes, in the words of Lord Hoffmann, “absolutely anything which would have affected the way in which the language of the document would have been understood by a reasonable [person]”. Whether something was or reasonably ought to have been within the common knowledge of the parties at the time of execution of the contract is a question of fact.</p>
</blockquote>
<p>More sophisticated parties will be understood to have (or should have had) different things in mind than unsophisticated parties when negotiating and executing agreements. See e.g. <em>NOV Enerflow ULC (NOV Pressure Pumping ULC) v. Enerflow Industries Inc.</em>, 2020 ABQB 347:</p>
<blockquote>
<p>Based on the above analysis, I find the parties to the PSA had QMS in mind when they executed the agreement. <strong>Given the sophistication of the parties</strong>, I find they chose to limit the QMS reference to one provision. If the parties had intended to go further and agree to representations concerning the Enerflow QMS, they could have done so. They did not do so.</p>
</blockquote>
<p>See also <em>1548 Richmond Manor Inc. v. Fido Solutions Inc.</em>, 2019 ONSC 3833:</p>
<blockquote>
<p>The Lease does not give the Tenant a right to be consulted on any development plan, or create a corresponding duty to consult on the Landlord. <strong>As both are sophisticated commercial parties</strong>, if they intended to create such rights and duties, they would have been included in the Lease.</p>
</blockquote>
<p>Contrast this with <em>Khajavi v. Eghtesadi</em>, 2016 BCSC 1127, in which the judge was willing to understand an arguably ambiguous or uncertain contract as binding, in part because, &quot;both parties are unsophisticated.&quot;</p>

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<h2>Contract <a href="https://www.corneyandlind.com.au/litigation/interpreting-contracts/" rel="noreferrer">interpretation</a> is about language and context and what they mean to a reasonable person</h2>
<p>Who drafted the contract does not generally enter the analysis although <a href="https://www.law.cornell.edu/wex/contra_proferentem#:%7E:text=Contra%20proferentem%20is%20a%20rule,meaning%20%E2%80%9Cagainst%20the%20offeror.%E2%80%9D" rel="noreferrer">contra proferentem</a> is an available, if rarely used tiebreaker.</p>
<blockquote>
<p>The purpose of the interpretation of a contract is not to discover how parties understood the language of the text; the aim is to determine the meaning of the contract against its objective contextual scene.</p>
</blockquote>
<p>Recent jurisprudence from the High Court in <a href="http://www.austlii.edu.au/cgi-bin/viewdoc/au/cases/cth/HCA/2014/7.html" rel="noreferrer">Electricity Generation Corporation v Woodside Energy Ltd [2014] HCA 7 (5 March 2014)</a> reaffirmed the High Court’s (and therefore all Australian court’s) approach.</p>
<blockquote>
<ol>
<li><p>Focus on objective meaning;</p>
</li>
<li><p>Consider language, surrounding circumstances, commercial purpose or objects;</p>
</li>
<li><p>Purpose or objects are informed by genesis, background, context and market; and</p>
</li>
<li><p>Adopt a businesslike interpretation (a commercial result not commercial nonsense or inconvenience).</p>
</li>
</ol>
<p>The decision in Verve v Woodside supports the idea that contract interpretation involves drawing conclusions based on the spirit of the text within what we know about the text. It is the drawing of conclusions respecting subjects that lie beyond the direct expression of the text from the elements known from and given in the text – conclusions which are in the spirit, though not within the letter of the text.</p>
</blockquote>
<p>For your example, if the plain meaning is X, and X is not absurd given the context, then it means X even if Y is more in line with the objectives of the contract. However, if if the words could support X <em>or</em> Y and Y is a better fit, then it means Y.</p>
