Download Understanding Contract Clauses: Conditions, Exclusions, and Interpretation and more Slides Commercial Law in PDF only on Docsity! Business Law Chapter 8: Contract Clauses Docsity.com Introduction to Contract Clauses • A contract clause is simply a statement contained in a contract. – Clause: A statement or sentence that is part of a legal document such as a contract, a will or a legal pleading. Docsity.com Distinguishing Conditions from Promises • A condition is different from a promise. • A condition modifies, alters or even rescinds the agreement. • A promise is the party’s pledge to be bound by the contractual agreement. Docsity.com Types of Conditions • Conditions come in many different forms. • It is not necessary to actually label a specific clause as a condition; it can be implied by the actions or the intentions of the parties. Docsity.com Implied Condition • An implied condition is one that is presumed to exist from the conduct of the parties. Docsity.com Limitations on Conditions Precedent • One party cannot prevent the other party from meeting the condition. • Courts do not favor conditions precedent. Docsity.com Condition Subsequent • Under a condition subsequent, the parties agree to be bound by the contract until a particular condition occurs. Docsity.com * Conditions subsequent always refer to future
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Interpreting Contract Provisions • Judges (or juries) interpret contract provisions. • Judges have wide discretion in their interpretations. Docsity.com Rule Number 1: Reconcile Conflicts • The first rule of construction is to find a way to reconcile them, unless that is clearly impossible. Docsity.com Rule Number 2. The Parties’ Intentions Are Controlling • The court must interpret the contract in such a way as to effectuate the intention of the parties, at least as far as that can be determined. Docsity.com Strict Construction • Strict construction of a law means taking it literally or “what is says, it means” so that the law should be applied to the narrowest possible set of situations. Docsity.com Rule Number 5. Was a Condition Intended? • Before a contract will be considered to have a specific condition, the parties must manifest that intention by their choice of wording. Docsity.com Rule Number 6 • Oral testimony about written promises is usually not permitted. Docsity.com Specific Contract Provisions • There are certain provisions that are frequently seen in drafting contracts. Docsity.com “Time is of the essence” • When a contract contains a “time is of the essence” provision it means that the date set for the action contemplated in the contract is fixed. Docsity.com “Trade or business secrets” • Employers wish to safeguard their secrets from their competitors. • Trade/business secret clauses are conditions that forbid employees from revealing business secrets. Docsity.com
