Construction of certain phrases: Overview, definition, and example
What is construction of certain phrases?
Construction of certain phrases refers to how specific words and phrases in a contract are interpreted to ensure consistency and clarity. Many contracts include a clause explaining how terms like "including" or "shall" should be understood to avoid disputes over meaning. This helps ensure that all parties interpret the contract in the same way.
For example, some contracts state that “including” means “including but not limited to,” clarifying that listed items are just examples, not an exhaustive list.
Why is construction of certain phrases important?
Clear contract language reduces misunderstandings and disputes. Without a defined interpretation, parties might argue over what certain words mean, leading to costly legal battles.
For businesses, having a construction clause ensures consistency in how the contract is read and applied. This is especially useful in agreements where technical or industry-specific terms are used.
Understanding construction of certain phrases through an example
Imagine a software company signs a licensing agreement that states, “The licensee may use the software for business purposes, including marketing and sales.” Without a construction clause, a dispute could arise over whether marketing and sales are the only allowed uses. If the contract states that “including” means “including but not limited to,” then the licensee can use the software for other business-related activities as well.
Another example is the use of "shall" in contracts. A service agreement might say, "The supplier shall deliver the goods within 30 days." If the contract clarifies that "shall" means a mandatory obligation, there is no doubt that the supplier must meet this deadline.
An example of a construction of certain phrases clause
Here’s how this type of clause might appear in a contract:
“For purposes of this Agreement, unless the context requires otherwise: (a) ‘including’ means ‘including, without limitation’; (b) ‘shall’ means an obligation, not a recommendation; and (c) words in the singular include the plural and vice versa.”
Conclusion
Defining how certain phrases are interpreted in a contract helps prevent disputes and ensures that all parties understand the agreement in the same way. By including a construction clause, businesses can reduce ambiguity, maintain consistency, and avoid legal conflicts over the meaning of key terms.
This article contains general legal information and does not contain legal advice. Cobrief is not a law firm or a substitute for an attorney or law firm. The law is complex and changes often. For legal advice, please ask a lawyer.