Interpretation of Construction Contracts

Contract interpretation is a common function of contractors, inspectors, designers, and contract administrators. This paper outlines rules of interpretation that can be used by contract administrators to resolve questions about the interpretation of a contract. The rules, arranged in hierarchical order, are based on a review of 100 appellate court decisions. The rules are: (1) The plain‐meaning rule; (2) patent ambiguity; (3) practical construction; and (4) interpret the contract as a whole. If there is still more than one logical interpretation, one must resort to the order‐of‐precedence clause or rule against the drafter. The rules are arranged in an easy‐to‐use flowchart format. An example of an actual contract dispute is presented to illustrate how to apply the rules. The outcome is compared to the actual court decision.