A. Introduction

• Author: John D. McCamus
• Profession: Professor of Law. Osgoode Hall Law School, York University
• Pages: 705-707

Page 705

The law of contracts provides an institutional framework within which parties who wish to do so can establish an enforceable agreement giving effect to their mutual intentions. The law of interpretation of agreements addresses the difficult task of determining, on the basis of the parties’ actual agreement, what those intentions should be considered to be. The process of interpretation is an exercise of giving meaning to the terms adopted by the parties in formulating their agreement.¹It is often said that the process of interpretation is an exercise in attempting to ascertain the "true intentions" of the parties. In Consolidated-Bathurst Export Ltd. v. Mutual Boiler & Machinery Insurance Co.,²for example, Estey J. observed as follows: "the normal rules of construction lead a court to search for an interpretation of which, from the whole of the contract, would appear to promote or advance the true intent of the parties at the time of entry into the contract."³

Page 706

For a variety of reasons, however, the "true intentions" of the parties may be an elusive quarry. As a matter of fact, in a particular case, the parties might have quite different intentions at the time of contracting, with respect to the meaning or significance of various aspects of their arrangements. The agreement may be entered into on the basis of a standard or printed form that at least one of the parties and perhaps both of them have neither read nor, if read, understood. The meaning of individual terms or phrases in the agreement may be obscure and may not have been clearly considered by the parties at the time of contract formation. The language employed may be ambiguous. The parties may have attached different meanings to particular terms of the agreement.

It would not be sensible for courts, in many if not all of these kinds of circumstances, simply to throw up their hands and conclude that since the "true intentions" of the parties cannot be established, the contract has no meaning and will not be enforced. Inescapably, then, the process of construction or interpretation of agreements must have an objective component, enabling the interpreter to attribute meaning to the agreement even in the absence of "true intentions." Such an approach could rest and does in fact to some extent rest on a presumption that the parties intended the terms of the agreement be given their literal meaning regardless of whether either party understood that meaning at the...