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Contract Interpretation & Drafting. Jack Friery UCSD Extension. Interpreting the Contract. Groucho: "That's in every contract, that's what you call a sanity clause." Chico: "You can't a fool-a me. There ain't no sanity clause” -- Groucho and Chico Marx in A Night at the Opera (Movie). - PowerPoint PPT Presentation
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Jack Friery
UCSD Extension
© 2007 1Jack Friery
Groucho: "That's in every contract, that's what you call a sanity clause."
Chico: "You can't a fool-a me. There ain't no sanity clause”
--Groucho and Chico Marx in A Night at the Opera (Movie)
© 2007Jack Friery 2
"The party of the first part..." is hereinafter called: "the party of the first part..." and "The party of the second part..." is hereinafter called: "the party of the second part...--Groucho and Chico Marx in A Night at the
Opera
© 2007Jack Friery 3
Read and interpret the contract as a wholeDon’t throw anything out
Give ambiguous terms their reasonable and effective meaningOrdinary terms—ordinary meaningTechnical terms—technical meaning Trade practice & prior dealings may
interpretCommon sense is part of the contract
© 2007Jack Friery 4
Order of preference if necessary:Negotiated terms over standardized termsSpecific terms over general termsWritten over typewritten termsTypewritten over pre-printed terms
Contra proferentem if all else fails: Interpret against the drafter
© 2007Jack Friery 5
Description of the parties “Whereas” clauses Defined terms & definitions
Capitalize defined termsBe consistent with terms
Effective date
© 2007Jack Friery 6
Anti-assignment Indemnity
Covered events (Negligence? Intentional acts?)
ProportionCap on liability
Severability clause
© 2007Jack Friery 7
Choice of law Disputes process
Preliminary negotiation? Establish time limit.
Mediation?Arbitration?
Where? Process? Binding or non-binding
© 2007Jack Friery 8
WarrantyDuration, notice, warranted events,
remedies Only modify in writing Publicity & disclosure Breach & remedies
Consequential damages?
© 2007Jack Friery 9
Termination & durationForce majeure Survival provision (proprietary data,
disputes) Integration clause
© 2007Jack Friery 10
© 2007Jack Friery 11