Interpretation Rules and Standard Contracts in Norwegian Contract Law

In situations where the interpretive elements do not point to a specific interpretive result in contract interpretation, an unwritten set of interpretive rules has developed in Norwegian law to guide the choice between different interpretive alternatives. These interpretive rules are general guidelines based on case law and apply when the specific interpretive elements do not provide a clear solution. This article addresses the central interpretive rules in Norwegian law and also examines particular considerations in the interpretation of standard contracts.

The Role and Nature of Interpretive Rules

Interpretive rules are guiding principles that provide guidelines on how to resolve interpretative disputes when the specific interpretive elements do not give a clear answer. They are party and contract-neutral, meaning they are general and based on a large number of concrete decisions in case law.

It is important to note that:

• The interpretive rules are distinctly advisory in nature.

• There are no fixed perceptions about when one rule should be applied over another.

• There are no clear guidelines on how conflicts between the interpretive rules should be resolved.

• The interpretive rules can only be considered when it has not been possible to arrive at an interpretive result based on interpretation elements.

• The interpretive rules serve a subsidiary function relative to interpretive elements.

The entire interpretive process is significantly based on considerations of reasonableness and fairness, which is reflected in the application of the interpretive rules.

The Ambiguity Rule – the Most Central Interpretive Rule

What is the Ambiguity Rule?

The ambiguity rule, also known as the "Celsian interpretive rule" after the Roman Celsus, is the interpretive rule that has gained the most significance in Norwegian case law. This rule entails that:

1. In the interpretation of written contract terms - especially standard terms - in cases of doubt, the contract will be interpreted to the detriment of the party who drafted the contested provision or who desired to make it part of the contract.

2. A contract in cases of doubt is interpreted against the party who, under the circumstances, should have expressed themselves more clearly.

The rationale for the ambiguity rule contains an element of fault: One party should have expressed themselves more clearly, and the consequence of violating this standard is that the agreement is interpreted against this party.

Legal Foundation

In Norwegian law, the ambiguity rule has legal grounding in the Agreement Act, section 37, first paragraph, number 3, which establishes that contract terms that are not individually negotiated should be interpreted in favor of the consumer. Otherwise, the foundation of the rule as a general principle must be sought in case law, including the judgments in Rt 1951 p. 976, Rt 1961 p. 1022, Rt 1997 p. 1807, and Rt 2012 p. 1267.

Internationally, the rule has also gained recognition, for instance, in the UNIDROIT Principles, article 4.6: "If contract terms supplied by one party are unclear, an interpretation against that party is preferred." In Germany, the ambiguity rule has been legislated since 1976 in the law on standard terms.

Practical Challenges

The application of the ambiguity rule is not always without problems:

1. It can be challenging to determine who proposed the disputed wording or who is "responsible for" the ambiguity.

2. The ambiguity rule can only be considered if it has not been possible to arrive at an interpretive result based on the primary interpretive elements.

Ambiguity Rule vs. Good Faith Standard

Both the ambiguity rule and the good faith standard share that the agreement is interpreted against the party who should have clarified a dissent in interpretation between the parties. The difference lies in:

• Ambiguity Rule: Allows the decisive factor to be the party's relationship to the formulation of the disputed party's expression – whether someone can be blamed for the agreement being formulated in an unclear or ambiguous manner.

• Good Faith Standard: Allows the decisive factor to be whether someone can be blamed for the other party having understood the agreement differently than themselves.

In practice, there can be gradual transitions between these legally different assessment criteria.

The Minimum Rule

What is the Minimum Rule?

The minimum rule implies that in cases of interpretative doubt, the interpretive alternative that is least burdensome for the promisor is chosen. This rule has been applied in several Supreme Court judgments, including Rt 1930 p. 799, Rt 1968 p. 783, and Rt 1987 p. 1239.

Criticism of the Minimum Rule

The minimum rule has been criticized as:

• Logically impossible and impractical to implement in mutually burdensome and beneficial contractual relationships.

• Basically only suggesting that one should be "kind" to one party in the contractual relationship.

Practical Application

Although skepticism should be exercised in using the minimum rule, it can express a principle that the one who wishes to impose a heavier obligation on the co-contractor than they have under non-mandatory law should make this clear – otherwise, they risk that the contract interpreter applies non-mandatory law as the basis for the interpretation.

For pre-emptive rights, this has been expressed in case law where no more is made of the right than what is securely founded in the wording.

"The Written Overrules the Printed"

This interpretive rule implies that when the parties have supplemented a set of printed contract terms with handwritten terms that contradict the printed, or the parties have replaced printed terms with written ones, the written terms prevail in case of conflict or other interpretative doubt.

However, it is uncertain how far this rule can be given significance in practice. Particularly where the written appears poorly considered, it may be argued that the printed should still be preferred. In such cases, doubt should be resolved based on real considerations – primarily which of the solutions, all things considered, seems the most reasonable.

Special Considerations in the Interpretation and Fulfillment of Standard Contracts

Particular Considerations for Standard Contracts

When interpreting standard terms, certain special factors traditionally apply compared to the interpretation of other contract terms:

• Searching for the parties' intention with the individual terms will often be pointless in standard terms, as the parties often cannot be said to have had any common understanding of how the individual terms should be interpreted.

• The Supreme Court has stated that there may be "reason to exercise considerable caution in interpreting an agreement relating to a standard contract, which the parties are unlikely to have seriously considered during the conclusion of the contract" (Rt 1981 p. 445).

Various Approaches to the Interpretation of Standard Contracts

In international law, different theories have developed about the interpretation of standard contracts:

1. The Law Interpretation Method: Standard contracts should be interpreted in much the same way as laws – particularly objectively.

2. The Contract Method: Allows for taking into account more subjective factors, such as what the other party has understood and should have understood.

In practice, these theories have been modified so that they no longer appear as two extremes.

Norwegian Case Law on the Interpretation of Standard Contracts

In Norwegian law, the following principles apply:

1. Starting Point: Even in the interpretation of standard terms, the starting point is the objective content of the agreement based on the natural linguistic understanding (Rt 1997 p. 1807).

2. Preparatory Works: There are examples where preparatory works for insurance terms and other standard terms have been considered in interpretation (Rt 1948 p. 329, Rt 1965 p. 844, HR-2016-1447-A).

3. Unilateral Standard Terms: If the standard terms are designed in a way that secures one party's interests at the expense of the other's, there is not as much reason to rely on preparatory works. In these cases, it may be more appropriate to interpret the standard terms restrictively in favor of the weaker party.

4. Balanced Standard Terms ("Agreed Documents"): For standard terms that are distinctly objective and reasonably consider both parties' interests, there is no basis for restrictive interpretation. These should instead be interpreted based on general principles of objective interpretation. The Supreme Court has stated that for "agreed documents," there is particular reason to give decisive weight to the wording (Rt 2010 p. 1345).

5. Unclear Wording: When the wording is unclear, even in the interpretation of standard contracts, it will be relevant to consider other interpretive elements than the wording, such as purpose, real considerations, systemic considerations, and the history of the terms, preparatory works and background law in the area (HR-2016-1447-A).

Modern Approach

Recent case law, particularly HR-2016-1447-A, provides clear guidance towards interpreting standard contracts not in a "special" way, but based on general rules and principles of contract interpretation. This case concerned a situation where a rental building was damaged in a fire technically caused by the tenant's use. The Supreme Court determined that a standard term on liability for damage "caused" by the tenant must be interpreted to presuppose breach, not just causation.

Conclusion

Interpretive rules constitute an important supplement in contract interpretation when specific interpretive elements do not provide a clear answer. Among these, the ambiguity rule has gained the most significance in Norwegian case law. In interpreting standard contracts, the same interpretative principles generally apply as for other contracts, but special consideration must be given to the peculiarities of standard contracts, including who drafted the terms and whether they reasonably consider both parties' interests. Modern case law indicates that interpreting standard contracts increasingly follows general principles of contract interpretation, with particular emphasis on objective interpretation based on the wording supplemented by other relevant interpretative elements when the wording does not provide a clear solution.