Legal Updates

When the language of a contract is vague in certain circumstances the Contra Proferentem rule

January 11, 2022

A class claim was filed against Mercantile Discount Bank for charging a "document editing fee" for the renewal or extension of bank guarantees, when in the framework of such, the amount of the guarantee is reduced.

The Court approved the claim as a class claim. The starting point for any interpretation of a contract is the language of the contract, whereby the purpose is to trace the intention of the parties upon concluding a contract between them by reviewing the language of the contract and the external circumstances (subjective purpose). In cases where there is no possibility of locating the subjective purpose, the Court must turn to the objective purpose of the contract, which is influenced by the principle of good faith, logic, business efficiency and common sense. Here, because the language of the bank tariff is vague and can be interpreted to each direction and because the bank tariff is a kind of a uniform contract, drafted by the bank, one should apply the legal rule of Contra Proferentem - interpretation against the drafter of the contract. The practical significance of the application of this rule is that the interpretation proposed by the client for the term 'renewal of a credit transaction' in the bank tariff should be preferred, and therefore, the motion for approval of a class action was accepted.