Principles for Interpretation of Contracts under Ethiopian law
Have you ever wondered how a confusing clause of a contract could be interpreted
when controversy arises? Below you will find the basic principles for interpretation of
contracts according to Ethiopian law.
In this case, interpretation means how the parties in the contract, third parties or even
the court think its provisions mean. Framing the contract is the obligation of the
parties and they choose the terms that bind them. Under Ethiopian law, this is done
with the minimum legal interference possible. (The Civil Code of Ethiopia art 1711).
So as a principle, if the provisions of a contract seem, in the eyes of a reasonable
person, clear courts cannot not infer a different meaning other than the one provided
by the contract. (The Civil Code of Ethiopia art 1733). It is only under exceptional
circumstances that the law allows another meaning to be inferred from a contract?s
provisions, these being:
1. Where the terms are ambiguous: (The Civil Code of Ethiopia arts 1734,
1736(2)) where the terms of a contract are unclear, the common intention of
the parties shall be sought. The court shall take into account what the parties
wanted out of the contract as well.
2. General terms: (The Civil Code of Ethiopia art 1735) It does not matter how
many general terms are used, if it can be sufficiently proven that the parties
used these general terms to refer to specific objects of agreement this shall be
considered by the court.
3. Positive interpretation: (The Civil Code of Ethiopia art 1737) this occurs
when a contract contains a term or article that can have a double translation.
One translation defeats the purpose of the contract where as the other
translation keeps the contract effective. The law chooses to ignore the first
translation keeps the contract effective, taking into account that the parties?
intention to be bound is more important than a tricky provision.
4. Interpretations in favor of the debtor: (The Civil Code of Ethiopia art 1738)
where the terms of a contract are unclear, the court may take into account for
whose advantage these terms were put in. And taking into account who bears
the obligation, it shall favor (even though slightly) him in its interpretation. The
reason behind this would be fairness. If the terms are unclear, a party which
assumes an obligation put on him may be left with a heavier obligation than he
thought he will have to fulfill. This law aims to protect him from this.
5. Gratuitous contracts: (The Civil Code of Ethiopia art 1739) since gratuitous
contracts are basically contracts of charity. So only one party, let?s call him the
giver owes a debt and the other owes only privilege. The law does not want to
create additional encumbrance on such a positive act. So provisions are inferred
in a way that will provide such debtor with the least obligation.
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