Contract Interpretation under French Law: The Contract Law Reform of 2016 -ARIA - Vol. 31, No. 1
Originally from the American Review of International Arbitration (ARIA)
From Plato to Locke and Frege, philosophers and linguists have highlighted that language is a necessary but imperfect vehicle for the expression of thought. This reveals its inherent vulnerability to ambiguity, obscurity, contradictions and omissions. As a result, when parties enter into a contract to formalize their agreed intentions, interpretation may be needed to decipher such intentions.
Contracts may contain express clauses which set out methods of interpretation, by way of definitions, document hierarchies or presumptions. Parties may also include interpretative addendums. However, it is impossible to address all potential eventualities in a contract, which necessitates techniques of contract interpretation to deal with any omissions or uncontemplated scenarios.
This article focuses on contract interpretation under French law, notably on the 2016 legislative reform. Indeed, the French reform is illustrative of this phenomenon of convergence, introducing an element of objective interpretation, and limiting the possibility for a judge or an arbitrator to turn to the context of the contract, to the detriment of its clear wording, to determine the common will of the parties.
The article then relativizes this turn towards a more objective interpretation of French law, in light of the fact that the 2016 reform grants more powers to the adjudicator to redress a distortion of the equilibrium of a contractual relationship. Indeed, the 2016 reform has introduced the concept of hardship into the French Civil Code, allowing the judge or the arbitrator to deviate from contractual terms where circumstances have changed significantly enough to disturb the contractual equilibrium. The 2016 reform has also reinforced an adjudicator’s ability to protect weaker parties. To a certain extent, these powers may render unnecessary a more “creative” interpretation as to the true common will of the parties, and may counterbalance the turn towards a more objective approach to contract interpretation.