Judgment of Supreme Court, Civil Chamber

15 December 2006

Case No. III CSK 349/2006

Contract interpretation - subjective and objective

1. Contract interpretation should seek the mutual intent of the parties and the purpose of the contract rather than rely on the literal wording. The parties to a contract thus have the right to expect, in the event of a dispute, that the court will look beyond the merely literal wording of contractual provisions.

2. In order to determine the substance of a preliminary agreement, the court should first conduct a subjective interpretation, and only if that fails turns to an objective interpretation, discerning the will of the parties as required by the facts under which their will was expressed, principles of social coexistence and customary practice.