Intention, Meaning and the Case for Reform of Contractual Interpretation in Australia

Abstract

Australian contracts are construed according to a literal interpretation of their words. Even if that interpretation is unfair or contrary to the mutual, communicated intent of the parties, the literal interpretation must prevail unless the words in the contract are ambiguous or susceptible to more than one meaning. This position has recently been affirmed by the High Court in Western Export Services v Jireh [2011] HCA 45. This article argues that this position is unsatisfactory having regard to the High Court’s own approach to statutory interpretation, developments in contractual interpretation in England and interpretative theories developed in linguistic philosophy about the importance of intention to the derivation of meaning. These approaches demonstrate that the preferable approach is to eschew unnecessarily restrictive rules to contractual interpretation and permit evidence that will assist the court to most effectively administer the task at hand: ascertaining a contract’s true meaning.