Oregon Construction Contractors (CCB) Practice Test

If a contract provision is vague, how is its meaning typically interpreted?

1. By the industry standard practices

2. By the actions of the parties involved

3. By the legal interpretation alone

4. By the terms of the contract alone

The correct answer is: By the actions of the parties involved

Vague contract provisions are generally interpreted by considering the actions of the parties involved. When the language of a contract is unclear, courts or other decision-makers look to how both parties have acted in relation to that provision, as this can provide insights into its intended meaning. The behaviors, communications, and interactions among the parties can serve as crucial context for understanding their mutual intent at the time the contract was formed. While industry standards and practices may play a role in interpreting certain aspects of a contract, they do not solely determine the meaning of vague clauses, as the specific actions taken by the parties often provide a clearer picture of their expectations and understanding. Legal interpretation can assist in clarifying ambiguities but relies heavily on the specific context of how the parties have behaved. Similarly, merely relying on the terms of the contract alone without considering the conduct of the parties may not accurately capture the intent behind the language used in the agreement. Therefore, the actions of the parties involved are paramount in resolving vagueness.