Rules for interpretation of contracts in accordance with the practice of the Supreme Court of Cassation

Contracts are to be interpreted when there is a dispute between the parties over the exact meaning of the contract’s provisions.

The practice of the Supreme Court of Cassation (SCC) makes it clear that interpretation is needed when there are unclear, incomplete, or imprecise contractual clauses, which due to their disadvantages cause suspicion and disagreement between the parties about the actual content of the general agreement reached when concluding the contract and the aimed legal consequences.¹

The main aim of the interpretation is to find out the actual general intention of the parties, while also preserving the whole operation of the contract as actually desired by the parties despite the included imprecise, inexact, and even incorrect formulations.

According to law, the rules when interpreting contracts are as follows:

• Separate agreements shall be interpreted in relation to one another
• Each agreement to be interpreted in the meaning coming from the whole contract
• The interpretation is to be made regarding the aim of the contract, customs in practice and good faith.

According to the practice of SCC, when interpreting disputed contractual clauses, the court is to consider not the literal meaning of the text but the meaning coming from the common sense of the agreement². The border when imposing this rule is the requirement for clarifying the expressed intention of the parties only and not the presupposed one. ³

The supreme judges accept in their practice that to clarify the actual intention of the parties, one can go further than the text of the contract itself by researching:

• The circumstances of the contract’s conclusion
• The emerged at this moment relations between the parties
• The behavior of the parties before and after the conclusion of the contract
• The exchanged details in relation to the way of the imposing of the contract
• How the obligations of the contract are performed after its conclusion.

When interpreting, one cannot change the intention of the contracting parties formed when concluding the contract and expressed in its content. ⁵

Finally, each contract’s agreement is to be interpreted regarding its systematical place in the contract and its general meaning.

The conclusion is that the process of interpreting is difficult and requires clarification of all circumstances related to the forming of the general intention of the parties.

Because of this reason, often to find out the actual content of the reached agreements the collection of voice evidence is allowed – by questioning of witnesses.

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[1] Decision № 50 30.07. 2019 c.c. № 1883 / 2018 of the Supreme Court of Cassation, 1^st c. d.

[2] Decision № 46 07.03.2018 c.c. № 2489/2017, the Supreme Court of Cassation, IV civil department, CC

[3] Decision № 64 19.11.2020 c.c. № 3301/2019, the Supreme Court of Cassation, 2^nd civil department

[4]  Decision № 52 10.06.2020 c.c. № 920/2019, the Supreme Court of Cassation, 2^nd commercial department; Decision № 215 12.10.2015 c.c. № 49/2015, the Supreme Court of Cassation, 3^rd civil department; Decision № 85/24.07.2015, case № 1207/2014, the Supreme Court of Cassation, CC, III civil department.

[5] Decision № 50 30.07.2019, c.c. № 1883/2018, the Supreme Court of Cassation, 1^st commercial department.

[6] Decision № 149 30.11.2017, c.c. № 268/2017, the Supreme Court of Cassation, 1^st commercial department

The article above is for information purposes only. It is not a (binding) legal advice. For a thorough understanding of the subjects covered and prior acting on any issue discussed we kindly recommend Readers consult Ilieva, Voutcheva & Co. Law Firm attorneys at law.