On The Contractual Interpretation Rules Of Uniform Commercial Code

A large number of comprehensive rules concerning contract interpretation have beendeveloped in American case law, Uniform Commercial Code has substituted some moreliberal rules on this subject for the rigid ones in the traditional case law, which gives rise to ablend of statute and case law contract interpretation rules. Although Uniform CommercialCode only governs a limited range of contracts, it exerts influence on the whole realm ofcontract interpretation given the fact that judges sitting in other kinds of contracts will refer tothese rule for some help. Under American law, interpretation of contract is viewed as aquestion of fact as opposed to a question of law, but the role played by judges in this processcould be very important and obvious. Meanwhile, the concept of contract interpretation isused in a narrow way, which only relates to the figure out the meaning of contract terms. Also,the differences between contract interpretation and contract construction are recognized by thejudges. There are some different points between contract interpretation rules and generaldefault rules.According to the definition of Uniform Commercial Code, the agreement is a mixture ofexpress terms and implied terms inferred from trade usage, course of dealing and course ofperformance incurred after the formation of agreement. Unless otherwise expressed by theparties, parol evidence rule will control the scope of the agreement and thus determine thesubject of contract interpretation. Parol evidence rule will exclude all or part oral and writtennegotiation documents prior to or contemporary with the agreement and is a rule ofsubstantive law. The presumption of application of this rule is that the parties to the agreementconsider the agreement as the final and complete expression of the duties and rights of parties.If the agreement is found completely integrated, no additional terms, even consistent, will beallowed to supplement the agreement. If partially integrated, additional and consistent termscould complement the agreement. Parol evidence rule will not govern under suchcircumstance as enforceability disputes, vague contract terms, reformation, collateralagreement, so extrinsic evidence will be allowed to solve these issues. Parties could make useof merger clause to realize the aim which parol evidence rule is designed for. Extrinsicevidence will not exclude from playing a role in the contract, when enforceability issue isattached to the merger clause as well as reformation and collateral agreement. And the judges hold that merger clause is not dispositive of the complete integration of the contract.The contract interpretation rules are composed by primary rules and secondary rules.Second rules will not come into play until after exhausting the primary rules still could notclarify the meaning of contract terms. Primary rules include plain meaning rule, contract readas a whole, Noscitur a Sociis, interpretation in light of circumstance at times contract wasmade. Secondary rules fall into three categories: principle rules, hierarchy of contract terms,special rules concerning itemized terms, each of which consists of different concrete rules.There is special rule with respect to relationship between implied-in-fact terms and expressones in Uniform Commercial Code. But judges hold in practice different altitudes towards thisrule. The gap-filling is process in which judges decide the legal arrangement of parties to thecontract and it bears some degree of linkage to contract interpretation.As to contract interpretation rules in China, more attention should paid to the reasonableones effective in America. The agreement of parties shall be the center of contractinterpretation, and, at the same time, judges in China should make a right choice on thesubject of contract interpretation and make proper use of the contract interpretation rules.