When it comes to interpreting contracts in the Philippines, there are several rules and principles that should be considered. The interpretation of contracts is important because it determines the rights and obligations of the parties involved.
Here are some of the basic rules when it comes to interpreting contracts in the Philippines:
Rule #1: The language used in the contract should be given its ordinary meaning
The first rule is that the language used in the contract should be given its ordinary meaning. This means that words should be interpreted in their usual and customary context. Courts will look to dictionary definitions to determine the meaning of words that are not commonly used.
Rule #2: The contract should be read as a whole
The second rule is that the contract should be read as a whole. This means that individual clauses or provisions should not be read in isolation, but in the context of the entire agreement. The goal is to determine the parties’ intent based on the entire document.
Rule #3: The contract should be interpreted in favor of the “weaker party”
Another rule is that the contract should be interpreted in favor of the “weaker party.” Generally, this refers to the party who did not draft the contract or who has less bargaining power. This is because it is assumed that the stronger party had more control over the drafting of the contract and was able to negotiate more favorable terms.
Rule #4: The contract should be interpreted according to its purpose
When interpreting a contract, it is important to consider the purpose of the agreement. This means looking at the underlying reasons for the contract and the parties’ intentions. This can be determined by looking at the circumstances surrounding the agreement and the negotiations leading up to it.
Rule #5: The contract should be interpreted in light of applicable laws
Finally, when interpreting a contract, it is important to consider any applicable laws and regulations. This includes both the laws of the Philippines and any international laws that may apply. If there is any ambiguity in the contract, courts may look to these laws to help interpret the agreement.
In conclusion, interpreting contracts in the Philippines requires careful consideration of several rules and principles. It is important to give the language used in the contract its ordinary meaning, read the contract as a whole, interpret the contract in favor of the weaker party, consider the purpose of the agreement, and take into account applicable laws. By following these rules, parties can ensure that their contractual rights and obligations are properly understood and enforced.