The Constitutional Court has reaffirmed that that approach to interpretation of contracts requires that from the outset one considers the context and the language together with neither predominating over the other.
The approach to interpretation is a unitary exercise. Interpretation is to be approached holistically, simultaneously considering the text, content and purpose.
Context and purpose must be taken into account as a matter of course whether or not the words used in the contract are ambiguous. So, a court should from the onset consider the contract’s factual matrix, its purpose, the circumstances leading up to its conclusion and the knowledge at the time of those who negotiated and produced the contract.
It is no longer our law that contextual evidence is only admissible to assist in interpreting a contract if the language of the contract under interpretation is ambiguous.
This approach is reaffirmed in this June 2021 Constitutional Court judgment
This means that parties may have to adduce evidence to establish the context and purpose of the relevant contractual provisions.
Evidence could include the pre-contractual exchanges by the parties leading up to the conclusion of the contract and the evidence and the context in which the contract is concluded.
That does not mean, said the Constitutional Court, that extrinsic evidence is always admissible. Interpretation is a matter of law and not fact and is always a matter for the court and not for the witnesses. The extent to which evidence may be admissible to contextualise the document to establish its factual matrix or purpose or for purposes of identification must be applied as conservatively as possible.
The unitary approach to contractual interpretation enjoins a court to err on the side of admitting the evidence. The court could still disregard the evidence on the basis that it lacks weight. Admissibility and weight should not be conflated.
The parol evidence rule is not an obstacle to evidence being admitted to assist the court in interpreting the contract. The evidence is inadmissible where it seeks to vary, contradict or add to the terms of the agreement.
