Application of the Contra Proferentem Rule in Business Contract Interpretation: Lessons Learnt from Singapore Court Decisions
DOI:
https://doi.org/10.30996/jhbbc.v9i1.132634Keywords:
contract interpretation, contra proferentem, singapore court decisionsAbstract
Ambiguity in contractual clauses is a frequent source of disputes and provides the basis for applying the contra proferentem principle under Article 1349 of the Indonesian Civil Code. However, Indonesian contract law lacks an adequate methodological framework to determine when a clause should be classified as ambiguous, resulting in the risk that contra proferentem is applied intuitively and inconsistently. This research seeks to formulate a systematic ambiguity-testing framework as a prerequisite for the application of contra proferentem, by examining and reconstructing judicial practice in Singapore, particularly through an analysis of Hewlett-Packard Singapore (Sales) Pte Ltd v Chin Shu Hwa Corinna. This research employs normative legal research, using a case approach and a conceptual approach. Primary legal materials in the form of Singapore court decisions are analysed alongside secondary materials from scholarly literature and journals to develop a coherent conceptual framework for testing ambiguity. This research finds that ambiguity must be assessed through four sequential stages: (i) examination of the contractual text; (ii) analysis of the relevant factual context; (iii) determination of the parties’ objective intention; and (iv) evaluation of whether the remaining meaning is reasonably acceptable within commercial reality. The contra proferentem principle may be applied only as a last resort, where more than one equally rational interpretation remains after these stages have been exhausted. The novelty of this study lies in its formulation of a structured ambiguity-testing framework that can be transplanted into Indonesian contract law practice to enhance legal certainty and strengthen party autonomy.
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