When interpreting a contract that is in dispute, contracts law has determined that the court or arbitrator should attempt to interpret the contract in such a way that it adheres to the original intent of the parties to the contract. The first way they try to do this is by examining the terms of a written contract. In an ideal situation, the intent of the parties can be determined from the written contract, and that intent is lawful.
However, the original, mutual intent of the parties cannot always be determined simply. In that case, the intent must be interpreted. This interpretation is determined in several different methods. The first is by examining the language in the contract by adhering to the plain meaning rule. If the plain meaning of the words cannot be determined in a conclusive manner, or the typical definitions do not appear to match the intentions of the parties, then sources outside of the contracts themselves may have to be consulted.
The first step taken is to determine if their are other contracts between the two parties that cover similar situations. While contracts law usually only are concerned with one contract at a time, if there is a body of contracts then these contracts may be interpreted to determine the general intentions of the parties.
A contract interpretation may also be influenced by recognizing what the contract is regarding. Every attempt is made to preserve the entirety of the contract under consideration. However, if it can be shown that the contract was an attempt by one party to defraud the other, then the interpretation may take that into account when interpreting the contract. When interpreting the contract in question, the courts make every attempt to avoid prejudice against any third party who benefited from the contract in good faith.
Despite this mandate not to unduly effect third parties, a third party may not attempt to force a court to interpret a contract unless one of the original parties to the contract requests the court or arbiter’s interpretation in the first place.