1. Overall
The rules on how an agreement should be interpreted consist of two provisions, and these are equally sound in NS 8411 and NS 8412.
The provisions briefly and precisely explain the current interpretation doctrine as developed through jurisprudence.
2. Starting points
If the parties agree on what one has meant, it does not matter how others understand the content of an agreement.
That is why, first of all, in case of disagreement between the parties it becomes important to have some driving rules for how the agreement should be interpreted and understood.
In cases where such disagreement is brought to a head and the parties go to the courts to have the issue settled, the parties' lawyers will normally have looked for supporting arguments in several places to substantiate their client's opinion as to what follows from the agreement.
Such arguments (or evidence) can be found in the written dialogue of the parties prior to the conclusion of the agreement, in documents such as minutes attached to the agreement, information about the knowledge of each other's wishes, intentions or limitations, attempts to explain how the parties have practiced the agreement after the conclusion of the agreement, etc.
In addition, rules are needed that can explain how to proceed if different documents contain conflicting information about what an agreement legally and actually entails.
In contract contracts such as NS 8405 and NS 8407, there are separate provisions on how the contracts are to be interpreted. Often, the contracts will contain significant amounts of documents, and they will also be drawn up over a relatively long period of time. For this reason, construction contracts contain rules of interpretation that are substantially more advanced and comprehensive than those found in NS 8411 and NS 8412. However, it is conceivable that the rules of interpretation in the contract may be relevant and our article on whether there is here.
3. Objective interpretation
NS 8411/ NS 8412 Paragraph 9 is concise, clear and close to the subject line.
It states that if it can “reimbursed” that the parties have had a “common understanding” of the content of the agreement “at the conclusion of the contract” then this one should be taken as a basis.
There is usually such a claim “common understanding” The parties' lawyers in a dispute will seek to probabilise or dispute when looking for supporting arguments as we wrote in paragraph 2 above.
Secondly, the provision describes what is meant by objective interpretation, namely that one should take “the starting point of a normal linguistic understanding”.
What is “normal linguistic comprehension” Of course, it can vary depending on the area of life in which you are.
Nevertheless, it will be the case that one starts from the words as they are used, and such a sensible person will perceive the meaning of the words.
If either party has put a very particular meaning content into a word or phrase that is later disputed, that particular meaning content cannot be given weight — unless “reimbursed” that the other party understood it.
Applying an objective understanding to interpret an agreement - and especially in professional relationships - has a rather far-reaching significance.
Such contracts will usually affect more than the two parties to the agreement.
As an example of “several”, mention is made of banks, insurance companies, underwriters, business associates, subcontractors or wholesalers who may individually (or collectively) have interests in such an agreement. Several of these must decide on risk and what kind of liability they assume - when the risk and/ or liability is derived from the original agreement.
Consequently, the starting point for any interpretation of an agreement should be that which must be considered to result from a”normal language comprehension” of the wording of the agreement.
Furthermore, paragraph 9 clarifies that it is not sufficient to read the provisions of the Agreement in isolation when mapping its contents, on the contrary. All contract documents shall “read in context”.
In some cases, an agreement may consist of very many documents. The acquisition will often have started with an offer basis from the buyer, and during clarification meetings the parties have come up with clarifications, changes or additions. These will often appear in a record, and they may also have entailed a revised offer basis or offer.
Once the final, formal offer is made, it may also be the subject of negotiations from which minutes are kept.
In addition to clarification meetings, the parties will be able to hold contract meetings where the focus will be on legal issues to a greater extent.
In sum, all these documents will be able to come up in a high number, and most often all of them are entered as attachments to the contract document.
It is not uncommon to find contradictory information in such documents.
In the event of a contradiction, it follows from NS 8411/ NS 8412 paragraph 9 that a solution should be sought based on three principles.
You have to read all documents in a “coherence”You have to look at the agreement. “purpose” and then you have to search for a “reasonable” solution.
Contract standard contracts such as NS 8405 and NS 8407 contain more advanced rules and principles of interpretation. Among other things, that newer documents should precede older ones when contradicting, and special provisions should precede general ones. We will assume that such an approach will also be natural when reading the documents in a “coherence” and therefore see no contradictions here.
The Criterion “reasonable” must not be read too literally, but seen in the light of the other two criteria “coherence” and “purpose”. Normally, the solution will not be to land on a result that one party considers “reasonable” if the solution cannot be reconciled with what would otherwise result from a “connection” between the relevant contract documents. The criterion of reasonableness probably comes in most often as a moment in which there are two alternative interpretative results and where both must be said to be equally applicable. Then one will probably land on the option that is considered most reasonable for the party (s) all aspects taken into account.
4th. Ambiguities
Paragraph 10 contains a rule from contract law called the obscurity rule or author rule.
It is not explicitly stated in paragraph 10, but it follows from case-law that the rule of ambiguity applies after applying the principles of interpretation set out in paragraph 3 and there are still doubts about the correct solution.
If that is the case, it follows from paragraph 10 that the ambiguity should go beyond the person who drew up the document.
Often this provision will not be so easy to apply if the parties have joined forces to draw up an agreement document. If that is the case, guidance can be found in another principle that ambiguities should go beyond those who had the authority to formulate themselves more precisely.
If the ambiguity is apparent from the offer basis itself, cf. clause 5.1 of the standards, the authorship rule will imply that the ambiguity is beyond the buyer. The opposite will be the result if the ambiguity is found in the seller's offer, see paragraph 5.2 or in the subsequent order confirmation, cf. paragraph 5.3.
Questions can then be asked about what will be the right solution if the parties have written minutes of clarification or negotiation meetings and the ambiguity can be returned to such a document.
The starting point will be that whoever authored the draft minutes carries the risk of obscurity. At the same time, minutes are usually considered as reunified after everyone has read through and given their input.
In such cases, too, it would be natural to apply the author's rule, and then that obscurity should go beyond the one who had a reason to express himself more clearly.
An example might illustrate the point.
During the negotiations between the parties, the buyer expresses that he will need the construction materials a few weeks after the conclusion of the agreement. Seller puts this down in the minutes.
The parties conclude the agreement and shortly thereafter notify the seller that the goods will be delivered five weeks later. Buyer responds to this and reports back that a delivery in five weeks will be far too late.
In our view, the author rule will not be of much help. On the other hand, the principle that obscurity should go beyond the one who had the greatest interest (prompting) to formulate itself more precisely. In the example, the buyer should have worded himself far more clearly than simply stating “a few weeks”. One should instead have stated clearly how many weeks were acceptable.
The last paragraph of paragraph 9 specifically mentions that where the agreement is the result of a formalised competition — of which public procurement is a particularly good example — the contracting authority has a special responsibility to formulate the competitive basis “in a clear and unambiguous way”.
It follows from clear case law (judgments of the Supreme Court) that ambiguities in the basis of competition are interpreted - as a general rule - to the disfavor of the contracting authority. However, the topic is extensive and we recommend that you contact a lawyer if you are in a difficult situation with high financial exposure.
