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Interpretation of Contracts

The document outlines rules for interpreting contracts under Philippine law. It states that the literal meaning of clear contract terms will control but that evident party intent prevails over literal terms. To determine intent, a court will principally consider contemporaneous and subsequent acts of the parties. General contract terms will not be understood to include distinct cases not intended by the parties. Ambiguous terms will be understood to render the contract effective. Terms will be interpreted together and consistently. Custom and usage will inform interpretations. Interpretations will not favor the party causing obscurity. For gratuitous contracts, doubts go to the least transmission of interests, while onerous contracts are construed in favor of greatest reciprocity. If the principal object is in doubt, the

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77 views11 pages

Interpretation of Contracts

The document outlines rules for interpreting contracts under Philippine law. It states that the literal meaning of clear contract terms will control but that evident party intent prevails over literal terms. To determine intent, a court will principally consider contemporaneous and subsequent acts of the parties. General contract terms will not be understood to include distinct cases not intended by the parties. Ambiguous terms will be understood to render the contract effective. Terms will be interpreted together and consistently. Custom and usage will inform interpretations. Interpretations will not favor the party causing obscurity. For gratuitous contracts, doubts go to the least transmission of interests, while onerous contracts are construed in favor of greatest reciprocity. If the principal object is in doubt, the

Uploaded by

Jean De Guzman
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
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Chapter 5

INTERPRETATION OF
CONTRACTS
ARTICLE 1370

If the terms of a contract are clear and


leave no doubt upon the intention of the
contracting parties, the literal meaning of
its stipulations shall control.
If the words appear to be contrary to the
evident intention of the parties, the latter
shall prevail over the former.
ARTICLE 1371

In order to judge the intention of the


contracting parties, their contemporaneous and
subsequent acts shall be principally considered.
ARTICLE 1372

However general the terms of a contract


may be, they shall not be understood to
comprehend things that are distinct and cases
that are different from those upon which the
parties intended to agree.
ARTICLE 1373

If some stipulation of any contract should


admit of several meanings, it shall be
understood as bearing that import which is
most adequate to render it effectual.
ARTICLE 1374

The various stipulations of a contract


shall be interpreted together, attributing to
the doubtful ones that senses which may result
from all of them taken jointly.
ARTICLE 1375

Words which may have different


significations shall be understood in that
which is most in keeping with the nature and
object of the contract.
ARTICLE 1376

The usage or custom of the place shall be


borne in mind in the interpretations of the
ambiguities of a contract, and shall fill the
omission of stipulations which are ordinarily
established.
ARTICLE 1377
The interpretation of obscure words or
stipulations in a contract shall not favor the
party who caused the obscurity.
ARTICLE 1378

When it is absolutely impossible to settle


doubts by the rules established in the preceding
articles, and the doubts refer to incidental
circumstances of a gratuitous contract, the least
transmission of rights and interest shall prevail.
If the contract is onerous, the doubt shall be
settled in favor of the greatest reciprocity of
interests.
If the doubts are cast upon the principal object of
the contract in such a way that it cannot be known
what may have been the intention or will of the
parties, the contract shall be null and void.
ARTICLE 1379

The principles of interpretation


stated in Rule 123 of the Rules of Court
shall likewise be observed in the
construction of contracts.

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