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Am Jur 2d - Contracts § 323

IV. Construction and Effect, A. General Rules of Construction, 1. In General, § 323 - Construction or interpretation of contracts, generally

In reviewing a contract, courts may engage in interpretation or construction of the contractual terms.[1] Contract interpretation involves ascertaining the meaning of contractual words; construction refers to deciding their legal effect.[2] Specifically, when interpreting a contract, the ultimate goal is to ascertain and give effect to the intent of the parties as reasonably manifested by the language of their written agreement, and when construing agreements involving clear and unambiguous terms, a court need only examine the writing itself to give effect to the parties' understanding.[3] Where a contract dispute centers on the meaning of certain terms, courts engage in the process of interpretation, rather than construction.[4]


It is doubtful if the abstract distinction between the terms is of any vital significance, and certainly, in common and legal usage, "construction" and "interpretation" are used interchangeably.[5]

The principles of contract construction are only guides to interpretation and not rules requiring blind adherence.[6] The courts must read a contract as the average person would read it and should not give a contract a strained or forced construction.[7]

A contract must be construed as of the date on which it was made;[8] a written contract becomes binding when it is finally executed or delivered, unless a different intent appears.[9] The date on a contract is ordinarily the effective date, and where the contract is executed later, its contractual terms relate back and are effective from the date of the contract if such coverage is clear from the face of the contract.[10]

Practice Tip:

When construing the date upon which a legal instrument was executed, the date on the instrument is generally considered prima facie evidence of the date of execution.[11]

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1   Payton v. DiGiacomo, 874 N.W.2d 673 (Iowa Ct. App. 2015) .

2   Payton v. DiGiacomo, 874 N.W.2d 673 (Iowa Ct. App. 2015) .

3   McWreath v. Range Resources-Appalachia, LLC, 81 F. Supp. 3d 448 (W.D. Pa. 2015) (applying Pennsylvania law) .
 Intention of parties and construction generally, see §§ 338 to 348 .

4   Payton v. DiGiacomo, 874 N.W.2d 673 (Iowa Ct. App. 2015) .
 The interpretation of a written instrument, even though it involves what might properly be called questions of fact, is essentially a judicial function to be exercised according to the generally accepted canons of interpretation so that the purposes of the instrument may be given effect. Ammerman v. Callender, 245 Cal. App. 4th 1058, 200 Cal. Rptr. 3d 38 (4th Dist. 2016) .

5   U.S. v. Keitel, 211 U.S. 370, 29 S. Ct. 123, 53 L. Ed. 230 (1908) ; Newark Publishers' Ass'n v. Newark Typographical Union, No. 103, 22 N.J. 419, 126 A.2d 348 (1956) ; Universal C. I. T. Credit Corp. v. Daniel, 150 Tex. 513, 243 S.W.2d 154 (1951) .

6   Burger King Corp. v. Horn & Hardart Co., 893 F.2d 525 (2d Cir. 1990) .

7   Allstate Ins. Co. v. Huizar, 52 P.3d 816 (Colo. 2002) ; Planters Gin Co. v. Federal Compress & Warehouse Co., Inc., 78 S.W.3d 885 (Tenn. 2002) ; E-Z Loader Boat Trailers, Inc. v. Travelers Indem. Co., 106 Wash. 2d 901, 726 P.2d 439 (1986) .

8   Bowdoin Square, L.L.C. v. Winn-Dixie Montgomery, Inc., 873 So. 2d 1091 (Ala. 2003) .

9   FH Partners, LLC v. Complete Home Concepts, Inc., 378 S.W.3d 387 (Mo. Ct. App. W.D. 2012) .

10   Asset Recovery Contracting, LLC v. Walsh Const. Co. of Illinois, 2012 IL App (1st) 101226, 366 Ill. Dec. 615, 980 N.E.2d 708 (App. Ct. 1st Dist. 2012) .

11   In re Estate of Elias, 408 Ill. App. 3d 301, 349 Ill. Dec. 519, 946 N.E.2d 1015 (1st Dist. 2011) .

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