What are the principles of interpretation regarding a written contract?

The principles of interpretation regarding written contracts were succinctly summarized in Athwal v. Black Top Cabs Ltd., 2012 BCCA 107 at para. 42: The contractual intent of parties to a written contract is objectively determined by construing the plain and ordinary meaning of the words of the contract in the context of the contract as a whole and the surrounding circumstances (or factual matrix) that existed at the time the contract was made, unless to do so would result in an absurdity. Where the language of a contract is not ambiguous (that is, when viewed objectively it raises only one reasonable interpretation), the words of the written contract are presumed to reflect the parties’ intention. An interpretation that renders one or more of the contract’s provisions ineffective will be rejected.

Oral contracts are interpreted based on essentially the same principles. There is greater flexibility in the nature of the evidence that is admissible to prove the terms of an oral contract and the meaning of the language used by the parties, recognizing oral contracts must be construed without the “key interpretive tool used to understand written contracts - the words of the agreement” (see De Cotiis v. Viam Holdings Ltd., 2010 BCCA 368 at para. 21). The court may consider both the parties’ conduct leading up to and following the conclusion of the alleged agreement.