Ordinary Meaning Of Language In Standard Form Contracts Trumps Interpretation Based On Industry Knowledge

Introduction

In Sabean v Portage La Prairie Mutual Insurance Co., the Supreme Court of Canada (SCC) found that, in standard form contracts, insurers cannot rely on specialized legal knowledge to advance interpretations departing from the ordinary meaning of provisions.¹ This will have repercussions throughout other industries that rely heavily on standard form contracts, such as oil and gas, banking, information technology, construction, real estate, franchising, and sales.

Key Rules of Interpretation

• Courts will not allow the drafter of the contract to benefit by applying sector-specific knowledge and law to interpret contractual provisions;
• Instead, courts will apply the ordinary meaning of the language in provisions;