How is a contract interpreted in Indian courts? Here's what you need to know! #law #education

Indian courts interpret contracts primarily using the literal rule (plain meaning), looking at the contract as a whole to find the parties' intention, guided by principles in the Indian Contract Act, and the Bharatiya Sakshya Adhiniyam, with recent trends emphasizing the original intent, business efficacy, and limiting extrinsic evidence, especially for clear agreements, though the Parol Evidence Rule allows exceptions to clarify ambiguity. Key Principles of Interpretation Literal/Plain Meaning Rule: Words are given their ordinary, natural meaning unless it leads to absurdity or contradicts the contract's purpose. Golden Rule: If the literal meaning creates an absurdity or is inconsistent with the overall document, courts can deviate to find a sensible meaning. Purposive Approach: Courts try to understand the contract's objective and the parties' true intention, considering the context. "Four Corners" Doctrine: Courts generally look within the contract document for meaning, restricting external evidence (Parol Evidence Rule) Harmonious Construction: Courts aim to give effect to all clauses, reading them together to avoid contradictions. Business Efficacy: Interpretation should support the commercial purpose and viability of the agreement, not undermine it. Custom & Usage: Established industry practices or local customs can clarify ambiguous technical terms, but not override clear terms. Relevant Laws & Statutes