Don't Act Surprised

It can happen that written stipulations in a contract are not what they seem: a clear obligation cut in stone. This may hold especially true if contracts are governed by Swiss substantive law. Under Swiss law, contracts are primarily interpreted in line with the actual intent of the parties. Only if such actual intent cannot be established, the contract will have to be interpreted on the basis of good faith, i.e. based on what a reasonable person would have understood when entering into the contract under the given circumstances.

Applied to a specific case, the use of either of the two interpretation methods may lead to significantly different results. In particular, subjective contract interpretation may take into account the individual conduct of the parties after entering into the contract. If the parties do not follow the provisions of the contract closely, such deviation from the contract might be interpreted as a modification and, hence, has the potential