Three Issues in Construction of Contracts

Supreme and Federal Court Judges' Conference 2016
Supreme/Banco Court Brisbane

RTF version - 160 kb

Introduction

1. I will deal with three issues which are broadly related to the construction of contracts, all of which build upon the theme of the objective theory of contract. The three areas are implied terms, rectification, and post-contractual conduct. 

2. The objective theory of contract was cogently set out in Taylor v Johnson [1983] HCA 5, (1983) 151 CLR 422 in the course of the High Court's consideration of the circumstances in which a mistake can make a contract voidable. Mason ACJ, Murphy and Deane JJ said (at 428-429) that the objective approach had 'command of the field'. Since then, the High Court has reiterated on a number of occasions that 'the legal rights and obligations of the parties turn upon what their words and conduct would be reasonably understood to convey, not upon actual beliefs or intentions': Equuscorp Pty Ltd v Glengallan Investments Pty Ltd [2004] HCA 55, (2004) 218 CLR 471 [34] (the Court). As French CJ observed in Byrnes v Kendle [2011] HCA 26 [59], 'the "objective theory" of contract formation is not concerned with "the real intentions of the parties, but with the outward manifestations of those intentions"'. Similarly, Heydon and Crennan JJ, quoting from Holmes J, said that:

[P]arties may be bound by a contract to things which neither of them intended, and when one does not know of the other's assent. ...

[T]he making of a contract depends not on the agreement of two minds in one intention, but on the agreement of two sets of external signs, – not on the parties' having meant the same thing but on their having said the same thing."

3. Part of the difficulty in the three areas I will explore concerns the constant reference to 'intention' in the law of contract. Although references to 'intention' in the context of contractual interpretation are often understood by reference to the objective theory of contract to mean the objective manifestations of agreement by the parties, this is not always so.

4. The language of intention in the law of contract became prominent in the modern law as a result of Pothier's treatise on The Law of Contracts (1761). Prior to the end of the 18^th century the operation of contract, within the highly formal structure of the forms of action, was objective. But Pothier, influenced by Rousseau, propounded a Will theory of contract. He saw contract as concerned with the true subjective intentions of the parties. The will theory of contract had powerful supporters. Aside from Pothier, another version of it was adopted in post-Napolonic Germany by the theorist von Savigny, who was strongly influenced by Kant. Their work crossed the channel when Pothier's treatise was translated by Sir William Evans in 1806. The German and French Will Theory very nearly caught on in English law. There remain traces of it in the law relating to mistake in contract. But unlike in France, it did not prevail in England, Australia or the United States, and I think rightly so.

5. There are a number of reasons which might explain why the subjective theory of contract declined. One of them may have been the ability of parties to testify in support of their own case. Another may have been the strength of the voices who spoke against it: in the United States there was Holmes, Cardozo, and Williston. In England, the judgments of Blackburn, and the writing of Judah Benjamin and, after a change of mind, Pollock.

6. As a theory of contract, the will theory is also very problematic. We are not morally bound to act in an interpersonal sense because of any subjective and uncommunicated thoughts in our heads. We become obliged because of the words we use and the actions we take by which we make undertakings to others. However, the three issues which I will explore briefly are areas where the objective theory of contract might assist in developing the doctrine, especially in understanding the meaning of references to 'intention'.

Implication of terms

7. Traditionally, implied terms have been divided into terms which are implied in fact and terms which are implied in law. This classification, and the labels, has serious difficulties, not least of which is the distinction between terms 'in fact' and terms 'in law'.

8. In Collector of Customs v Agfa-Gevaert Ltd  [1996] HCA 36; (1996) 186 CLR 389, 397, the High Court spoke of the distinction between law and fact and said that 'all that is required for a reviewable question of law to be raised is for a phrase to be identified as being used in a sense different from that which it has in ordinary speech'. Indeed, the Court hinted that questions of law might go further because of the difficulty in separating the concepts of 'meaning' and 'construction':

[i]f the notions of meaning and construction are interdependent, as we think they are, then it is difficult to see how meaning is a question of fact while construction is a question of law without insisting on some qualification concerning construction that is currently absent from the law.'

9. The same might be said of the process of implication. It is hard to see how any implication can be said to be purely "in fact" when the implication is dependent upon matters including the surrounding circumstances known to both parties at the time of the contract, commercial common sense, and the reasonable reader or reasonable parties: see also J Gardner "The Many Faces of the Reasonable Person" (2015) 131 LQR 563.

10. In the Privy Council case of BP Refinery (Westernport) Pty Ltd v President, Councillors and Ratepayers of the Shire of Hastings (1977) 52 ALJR 20, [1977] UKPC 13, 26, Lord Simon (speaking for the majority) set out the test for implication of terms in a different expression from questions of construction:

[F]or a term to be implied, the following conditions (which may overlap) must be satisfied: (1) it must be reasonable and equitable; (2) it must be necessary to give business efficacy to the contract, so that no term will be implied if the contract is effective without it; (3) it must be so obvious that 'it goes without saying'; (4) it must be capable of clear expression; (5) it must not contradict any express term of the contract.

11. These five requirements for implication of a term came under pressure in Attorney General of Belize & Ors v Belize Telecom Ltd & Anor (Belize) [2009] UKPC 10; [2009] WLR 1988. That case concerned the construction of articles of association of a company. The decision of the Board was delivered by Lord Hoffmann. But it is important to note that it was not merely a decision of Lord Hoffmann. It was also a decision of Lord Rodger, Baroness Hale, Lord Carswell, and Lord Brown.

12. In Belize, at [19], Lord Hoffmann said that implication is an exercise of construction. He gave several reasons for this. First, he said that as a matter of logic implication must be an exercise in construction since a court has no power to alter what the instrument means.

13. Secondly, as a matter of authority, in Trollope & Colls Ltd v North West Metropolitan Regional Hospital Board [1973] 1 WLR 601, 609 Lord Pearson, with whom Lord Guest and Lord Diplock agreed, said that "an unexpressed term can be implied if and only if the court finds that the parties must have intended that term to form part of their contract". Lord Hoffmann therefore concluded that "in every case in which it is said that some provision ought to be implied in an instrument, the question for the court is whether such a provision would spell out in express words what the instrument, read against the relevant background, would reasonably be understood to mean". He emphasised that the five "criteria" in BP were not different or additional tests. The question of what the instrument is reasonably understood to mean is the only question.

14. Very recently there has been a counter-revolution in England. Lord Hoffmann's refinement of the English and Australian position deriving from the BP fivefold test came under attack.

15. In Marks and Spencer plc v BNP Paribas Securities Services Trust Company (Jersey) Ltd & Anor [2015] UKSC 72 the UK Supreme Court again considered the issue. A lease had been granted with rent payable in advance quarterly. The tenant exercised its right under a break clause to determine the lease on 24 January 2012. The tenant had paid the full quarter's rent on 25 December 2011 so it argued that there was an implied term that it could recover from the landlords the apportioned rent in respect of the period from 24 January to 24 March 2012. All of the Supreme Court held that it could not. One reason which was heavily influential was that non-apportionability of such rent had been long and clearly established by authority and the lease was "a very full and carefully considered contract, which includes express obligations of the same nature as the proposed implied term, namely financial liabilities in connection with the tenant's right to break, and that term would lie somewhat uneasily with some of those provisions".

16. The broader significance of the decision, however, came in the discussion by Lord Neuberger (with whom Lords Sumption and Hodge agreed) concerning implied terms and the Belize decision. Lord Neuberger disagreed with the approach of the Privy Council in Belize. His Lordship said that "construing the words used and implying additional words are different processes governed by different rules". Lord Neuberger said, at [29], quoting from Sir Thomas Bingham in Philips Electronique Grand Public SA v British Sky Broadcasting Ltd [1995] EMLR 472 at 481 that interpretation involved resolving ambiguities or reconciling apparent inconsistencies to attribute the true meaning to the language used by the parties. In contrast implication was said to "deal with matters for which, ex hypothesi, the parties themselves have made no provision". The more restrictive test for implication arose because implication of terms is so potentially intrusive. Lord Neuberger said that Lord Hoffmann's words were capable of more than one interpretation and so, henceforth, should be regarded as "a characteristically inspired discussion rather than authoritative guidance on the law of implied terms".

17. Although defending the traditional approach, Lord Neuberger refined the five BP criteria to three. He explained that (1) was redundant because if a term satisfies the other requirements, it is hard to think that it would not be reasonable and equitable. He also explained that in practice it would be a rare case where only one of those two requirements of business necessity and obviousness would be satisfied. The two should be alternatives. In effect then, the five criteria reduce to: (1) it must be necessary to give business efficacy to the contract, so that no term will be implied if the contract is effective without it; (2) it must be capable of clear expression; (3) it must not contradict any express term of the contract.

18. It may be that, by this discussion, Lord Neuberger was suggesting that the process of implication was different from construction because implication involves the courts attributing to a contract a meaning that the parties had not themselves manifested. This seems to be the effect of the citation of the remarks in Philips and the rejection of the conception of implication as being part of the exercise of construction. If so, then the decision is radical. It would permit a court to make a new contract for the parties, by a clear term which is not inconsistent with the contract, where the contract that the parties had drafted was not effective for business efficacy.

19. It is unfortunate that the Supreme Court was not referred to the decision of the High Court of Australia the previous year in Commonwealth Bank of Australia v Barker [2014] HCA 32; (2014) 253 CLR 169, 186 French CJ, Bell and Keane JJ referred to Lord Hoffmann's approach in Belize and reiterated the words of Mason J in Codelfa Construction Pty Ltd v State Rail Authority of NSW [1982] HCA 24; (1982) 149 CLR 337, 345 (Mason J, Stephen J agreeing at 344, Wilson J agreeing at 392) that implication is not "an orthodox exercise in the interpretation of the language of a contract, that is, assigning a meaning to a particular provision" but it is nevertheless an "exercise in interpretation, though not an orthodox instance."

20. It may be that the best way of understanding Mason J's remarks about implication being an unorthodox exercise in interpretation is by reference to the distinction drawn by Issacs J in Life Insurance Co of Australia Ltd v Phillips^[1] Isaacs J, drawing on what Lindley LJ said in Chatenay v Brazilian Submarine Telegraph Co^[2], between "interpretation" which identifies meaning and "construction" which identifies legal effect. As Allsop CJ has recently explained, although these two concepts of interpretation and construction are interdependent, the conceptual distinction between them may assist in comprehending their role: see J Allsop 'Characterisation: Its place in Contractual Analysis and Related Enquiries' (2015). In the case of implication, it might be an unorthodox exercise in interpretation but it is a conventional exercise of construction, that is in ascertaining the legal meaning and effect of a document. 

21. The difference between High Court of Australia and the position now of the UK Supreme Court are not merely matters of theory. If implication is not part of construction then it should occur extremely infrequently. It is hard to justify a court's role in supplementing a contract with matters which have not been expressed by the parties but which the court believes, by reference to whatever criteria, should have been expressed. In contrast, it is far easier to justify the implication of terms as an exercise in interpretation where the court is considering the effect of the words expressed by the parties. As Professor Robertson has recently explained, since this implication does not involve assigning a meaning to a particular provision, the process requires focus on other aspects of the agreement, in particular logic (a logical inference from the express terms), efficacy (to make the contract work) and purpose (to prevent a contractual purpose from being defeated): see A Robertson 'The Foundations of Implied Terms: Logic, Efficacy and Purpose' in S Degeling, J Edelman and J Goudkamp Contract in Commercial Law (2016, forthcoming).

Rectification

22. The role of rectification and its relationship with construction is deeply unsettled. In England it seems as though the judges are writing extrajudically of almost nothing else: Sir Kim Lewison, 'If It Ain't Broke Don't Fix It: Rectification and the Boundaries of Interpretation', the Jonathan Brock Memorial Lecture, 2008, reprinted in the First Supplement (2010) to K Lewison, The Interpretation of Contracts (4th edn, Sweet & Maxwell 2007) 127; Sir Paul Morgan, 'Rectification: Is it Broken? Common Mistake after Daventry' [2013] RLR 1; Sir Nicholas Patten,'Does the law need to be rectified? Chartbrook revisited', 2013 Chancery Bar Association Annual Lecture (available at http://www.chba.org.uk/for-members/library/annual-lectures); Lord Toulson,'Does Rectification require Rectifying?' (available athttps://www.supremecourt.uk/docs/speech-131031.pdf); Sir Terence Etherton, 'Contract Formation and the Fog of Rectification' (2015) 68 CLP 367; Lord Hoffmann,'Rectification and other Mistakes Lecture to the Commercial Bar Association on 3 November 2015 available at http://www.combar.com

23. Some of the leading obiter dicta in Australia is again contained in Codelfa Construction Pty Ltd v State Rail Authority of NSW [1982] HCA 24; (1982) 149 CLR 337 (Mason J). In that case there was no claim made for rectification. At 346, Mason J compared rectification with interpretation:

The difference is that with rectification the term which has been omitted and should have been included was actually agreed upon; with implication the term is one which it is presumed that the parties would have agreed upon had they turned their minds to it - it is not a term that they have actually agreed upon. Thus, in the case of the implied term the deficiency in the expression of the consensual agreement is caused by the failure of the parties to direct their minds to a particular eventuality and to make explicit provision for it. Rectification ensures that the contract gives effect to the parties' actual intention; the implication of a term is designed to give effect to the parties' presumed intention.

24. What was meant by Mason J's reference to the parties' "actual intention"? On one view, his Honour was distinguishing between the true or actual expressed intentions of the parties based on previous words and conduct and the incorrect expressed intention in the written contract. On another view, his Honour is contrasting the actual subjective intention of the parties with the presumed objective intention of the parties.

25. The leading decision in England is Chartbrook Ltd v Persimmon Homes Ltd [2009] UKHL 38; [2009] 1 AC 1101. In that case, Lord Hoffmann in the House of Lords approved the traditional approach deriving from the decision of Denning LJ in Frederick E Rose (London) Ltd v William H Pim Jnr & Co Ld [1953] 2 QB 450, 461. That case involved the sale of Moroccan horse beans. Both the buyer and the seller had mistakenly believed that all horse beans were feveroles. They had discussed this. The buyer needed feveroles for a resale. The horse beans that were supplied were not feveroles. The buyer tried to rectify. He failed. Denning LJ said:

Rectification is concerned with contracts and documents, not with intentions. In order to get rectification it is necessary to show that the parties were in complete agreement on the terms of their contract, but by an error wrote them down wrongly; and in this regard, in order to ascertain the terms of their contract, you do not look into the inner minds of the parties - into their intentions - any more than you do in the formation of any other contract. You look at their outward acts, that is, at what they said or wrote to one another in coming to their agreement, and then compare it with the document which they have signed. If you can predicate with certainty what their contract was, and that it is, by a common mistake, wrongly expressed in the document, then you rectify the document; but nothing less will suffice.

26. That view has come under attack from some quarters in England. Others, perhaps unsurprisingly including Lord Hoffmann, have defended it. As Professor Stevens has recently observed, the English approach is effectively to permit partial rescission of a written contract where the term in that written contract is inconsistent with what had previously been agreed. This is why it is sometimes said to be an exception to the parol evidence rule.

27. At first glance, the discussion in Chartbrook appears inconsistent with the comments of Mason J (Menzies J agreeing) in Maralinga Pty Ltd v Major Enterprises Pty Ltd [1973] HCA 23; (1973) 128 CLR 336, 350:

It is now settled that the existence of an antecedent agreement is not essential to the grant of relief by way of rectification. It may be granted in cases in which the instrument sought to be rectified constitutes the only agreement between the parties, but does not reflect their common intention (Shipley Urban District Council v. Bradford Corporation (1936) Ch 375 ; Slee v. Warke [1949] HCA 57; (1949) 86 CLR 271 ).

28. But Mason J was not denying the need for the parties to have reached an antecedent agreement on the term which was not included in the agreement between them. The point being made was that despite earlier authority it was possible for the written contract to be the only contract but that evidence could still be led to show that the parties had agreed to include a term which is different from the term which was included in the written agreement. That was the point that Simonds J was making in Shipley, which was endorsed by the High Court in Slee.

29. The English position, however, does not represent an Australian consensus. There seems to be three recent approaches in Australia.

30. One approach is that taken in New South Wales which is that rectification is concerned with "subjective" common intentions but that those subjective common intentions must have been disclosed in some way, although not necessarily to give rise to an outward expression of accord between the parties: Ryledar Pty Ltd v Euphoric Pty Ltd [2007] NSWCA 65; (2007) 69 NSWLR 603 [273] - [316], esp [281], [316]. As Campbell JA said in that case (at [315]):

If two negotiating parties each had a particular intention about the agreement they would enter, and their intentions were identical, but that intention was disclosed by neither of them, and they later entered a document that did not accord with that intention, what would be the injustice or unconscientiousness in either of them enforcing the document according to its terms?

31. A second view is that taken in Western Australia in Tipperary Developments Pty Ltd v Western Australia [2009] WASCA 126; (2009) 38 WAR 488, 547 [281] where McLure JA (Wheeler and Newnes JJA agreeing) referred without reference to Ryledar  to (at [281])

In order to obtain an order for rectification, the objectively determined common intention must persist until the time of the execution of the relevant document and there must be a disconformity between the common continuing intention and the terms of the document. Evidence of a common continuing intention and disconformity compels an inference of mistake.

32. A third approach was also taken in Western Australia. In Technomin Australia Pty Ltd v Xstrata Nickel Australasia Operations Pty Ltd [2014] WASCA 164 [134], McLure P (Newnes JA agreeing) said that the "whilst direct evidence of the actual intention of the contracting parties and evidence of their negotiations are admissible in a rectification claim, they are inadmissible as an aid to construction: Codelfa (352). That is because the test of intention in rectification is subjective". The reference to subjective intention in that case was not qualified by any insistence that the subjective intention must have been disclosed or that there must be evidence of accord between the parties.

33. More recently, the Court of Appeal in Western Australia in RCR Tomlinson Ltd v Russell [2015] WASCA 154 [53] said that "in order to constitute a common intention the intention of the parties must have been disclosed in some way, although not necessarily by a direct communication that gives rise to an outward expression of accord between them".

34. Whichever of these Australian approaches is adopted, it is very different from the English approach in Chartbrook. On the English approach rectification operates essentially as a way of rescinding part of the written contract and replacing it with a prior oral agreement (for which evidence is necessary of objective agreement). Indeed, this is entirely consistent with the remarks of Mason J in Codelfa (at 352) that "the parol evidence rule has the effect that a prior oral agreement of the parties is inadmissible in aid of construction, though admissible in an action for rectification".

35. On the Australian approach, however, the dominant view appears to be that rectification is both subjective and objective. The underlying rationale for it seems to be that one party who knows of, and shares, another's mistake due to some objective conduct that has passed between them, is bound by the agreement as they subjectively understood it rather than as it was written down. It seems that in England, with one large qualification, the decision in Frederick E Rose (London) Ltd v William H Pim Jnr & Co Ld is good law. In Australia it may not be.

36. The large qualification concerns the operation of unilateral mistake rectification. In Maralinga Pty Ltd v Major Enterprises Pty Ltd [1973] HCA 23; (1973) 128 CLR 336 Mason J said at 351, referring to counsel's argument about

a series of authorities which are said to decide that if one party to a transaction knows that the instrument contains a mistake in his favour but does nothing to correct it, he will be precluded from asserting that the mistake is unilateral and not common: see Whiteley v. Delaney [1914] AC 132 ; Monaghan County Council v. Vaughan (1948) IR 306 ; George Cohen, Sons & Co. Ltd. v. Docks and Inland Waterways Executive (1950) 84 LlLR 97 .

37. This is a doctrine which is genuinely concerned with the subjective state of mind of one party and the other's knowledge of it. It may be that the operation of that doctrine is based upon exactly the same considerations of unconscientiousness as those which are described in some of the Australian rectification cases. On one view, it is hard to see how a subjective and uncommunicated mistake by one party can permit a court to amend the terms of a contract even if that mistake is known to the other party. It might lead to rescission or, more controversially, partial rescission of the contract but as a matter of the objective theory of contract it is hard to see why the contract should be amended. Of course, this doctrine might still have the same effect as rectification as in cases where the term had been communicated between the parties. The relevant term would be rescinded and replaced with the term that had previously agreed. That was the effect of their Lordship's remarks in Whiteley. On another view, the knowledge by one party of a mistake by the other creates an estoppel which prevents the party who knows of the mistake from resisting rectification of the agreement.

38. Interestingly, however, in Australia (but not in England) when one party to a contract knows of, or induces another's mistake, there is a separate equitable doctrine which permits the contract to be rescinded entirely rather than specifically performed based on the mistaken understanding: Taylor v Johnson [1983] HCA 5; (1983) 151 CLR 422. In that case, the rectification claim was not made.

Post-contractual conduct

39. The leading authority is Agricultural & Rural Finance Pty Ltd v Gardiner [2008] HCA 57; (2008) 238 CLR 570, 582 [35]: the general principle that "it is not legitimate to use as an aid in the construction of [a] contract anything which the parties said or did after it was made" (Gummow, Hayne and Kiefel JJ). This was expressed as a general principle because there are some rare exceptions. For instance, one exception which I am not yet aware of being overruled is contracts relating to an interest in land. In L Schuler AG v Wickman Machine Tool Sales Ltd [1973] UKHL 2; [1974] AC 235, 261, Lord Wilberforce described this as "the refuge of the desperate".

40. There are, of course, circumstances where post-contractual evidence is admissible for reasons other than construction. For instance, (i) to determine the meaning of words in ancient documents where the meaning of those words is now obscure: L Schuler AG v Wickman Machine Tool Sales Ltd [1973] UKHL 2; [1974] AC 235, 261 (Lord Wilberforce); (ii) or where there is a dispute about whether the document is genuine: Netglory Pty Ltd v Caratti [2013] WASC 364; or (iii) to resolve what was said in forming an oral contract: Fazio v Fazio [2012] WASCA 72 [193] (Murphy JA; Pullin and Newnes JJA agreeing).

41. More difficult, however, is whether post-contractual evidence is admissible to determine whether the parties had formed a contract rather than to construe the terms of the contract.

42. Consider the following example. A and B Pty Ltd both sign a note which provides that "A will pay $5,000 for the delivery by B Pty Ltd of 1,000 widgets". The price of widgets subsequently skyrockets. A week later, A writes to the managing director of B Pty Ltd and says "I did not consider that we had entered a binding contract last week, should we meet to discuss a contract?" The managing director of B Pty Ltd circulates an internal memorandum among the directors which records that he also did not consider that a binding contract had been reached but that he did not want to meet. They never meet. Can A enforce the contract?

43. On one view, A cannot. In Barrier Wharfs Ltd v W Scott Fell & Co Ltd [1908] HCA 88; (1908) 5 CLR 647, 669 Griffith CJ held that letters exchanged between the parties did not, on their face, establish a binding contract. However, the Chief Justice also held that if they did prima facie establish a binding contract then "the subsequent correspondence shows that it was not in the contemplation of the parties that they were to be bound until all the essential preliminaries had been agreed to, nor until a formal contract had been drawn up".

44. Again, in Lym International Pty Ltd v Marcolongo [2011] NSWCA 303 [144], Campbell JA said:

A different task again is deciding whether particular writing is or is not a contract. The cases cited by McColl JA in County [Securities Pty Ltd v Challenger Group Holdings Pty Ltd [2008] NSWCA 193 [161]] show that the admissibility of conduct that is subsequent to the writing is well recognised for the purposes of that task. That is because that task is a specialised subcategory of the task of "ascertaining what has been agreed", and subsequent conduct like the parties continuing to negotiate, or failing to act at times when action would be called for if they had in truth made a contract, can assist in deciding whether the particular writing has been agreed on.

45. It may be that neither of these statements is suggesting that post-contractual conduct is admissible in order to determine whether agreement has been reached. Such a conclusion would have to be an exception to the High Court's approach in Agricultural and Rural since the task of determining whether a writing is a contract is a subcategory of ascertaining what has been agreed (see also Ermogenous v Greek Orthodox Community of SA Inc [2002] HCA 8; (2002) 209 CLR 95, 105-106 [25], Gaudron, McHugh, Hayne and Callinan JJ). Such a conclusion would mean that, without variation, estoppel, or abandonment, a contract could be binding on one day between the parties but not binding on the next.

46. One possibility is that the statement by Griffith CJ referring to a "prima facie" binding contract was intended to refer to a contract which, if binding, was later abandoned by the conduct of the parties in favour of an agreement not to be bound until a new formal contract had been drawn up.

47. The view that post-contractual conduct is relevant to determine whether an agreement has been reached might also be difficult to reconcile with the objective theory of contract formation. A party's subjective views about whether a contract has been reached ought to be irrelevant under the objective theory. The perfect point to end is with the comments of Basten JA in Johnston v Brightstars Holding Company Pty Ltd [2014] NSWCA 150 [120], who explained that the principle that

anything which the parties said or did after a contract was made cannot be used "as an aid in the construction of" the contract … derives from the "objective" theory of contract, which provides that the legal obligations of the parties to the contract do not depend upon their subjective beliefs but upon the view of the reasonable bystander informed as to the surrounding context and circumstances...