Interpretation of contracts – Contracts Law

1. Rules to interpreting contracts

a. Literal meaning 

If the terms of a contract are clear and leave no doubt upon the intention of the contracting parties, the literal meaning of its stipulations shall control. (Article 1370, Civil Code)

b. Intention over words/terms

If the words appear to be contrary to the evident intention of the parties, the latter shall prevail over the former. (Paragraph 2, Article 1370, Ibid.)

1) Contemporaneous and subsequent acts

In order to judge the intention of the contracting parties, their contemporaneous and subsequent acts shall be principally considered. (Article 1371, Ibid.)

2) Limitations on general contracts

However general the terms of a contract may be, they shall not be understood to comprehend things that are distinct and cases that are different from those upon which the parties intended to agree. (Article 1372, Ibid.)

c. Several meanings

If some stipulation of any contract should admit of several meanings, it shall be understood as bearing that import which is most adequate to render it effectual. (Article 1373, Ibid.)

d. Various stipulations

The various stipulations of a contract shall be interp...