Definitions and interpretation: Overview, definition, and example
What is definitions and interpretation?
Definitions and interpretation is a section in a contract that sets out the meanings of key terms (“definitions”) and provides rules for how the contract should be read and understood (“interpretation”). It helps create consistency throughout the document so that each term has a clear and specific meaning, and the contract as a whole follows consistent reading rules.
Why is definitions and interpretation important?
Without clear definitions and interpretation rules, even simple words can be misunderstood. This section ensures that technical, business, or industry-specific terms are explained up front. Interpretation rules help resolve ambiguities by laying out how to read the contract—for example, whether singular includes plural, how references to people or companies are treated, or how headings should be viewed. Together, these elements reduce confusion and legal risk.
Understanding definitions and interpretation through an example
Here’s how definitions and interpretation might appear in a real contract. In a commercial lease, “Premises” might be defined to include both the office space and access to common areas. Later, when the contract refers to “Premises,” it’s clear that it includes more than just the four walls of the tenant’s suite.
The interpretation section might say: “The use of the word ‘including’ means ‘including without limitation.’” That helps avoid arguments later if someone tries to say the list of items was exhaustive when it wasn’t meant to be.
Example of a definitions and interpretation clause
Here’s how an example definitions and interpretation clause may look like in a contract:
Capitalized terms shall have the meanings assigned to them in this agreement. Unless the context requires otherwise, words in the singular include the plural and vice versa, references to persons include companies and other legal entities, and the words “including,” “includes,” and “include” are deemed to be followed by the words “without limitation.”
Conclusion
Definitions and interpretation clauses provide clarity, consistency, and structure to a contract. They help both parties avoid misunderstandings and set a common foundation for how the rest of the agreement should be read. If something in a contract feels unclear, this section is a good place to start.
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.