How to interpret time periods in a contract
“I was recently reading my standard cellphone contract and was amazed to notice how many items were linked to days. It wasn’t immediately clear to me if it was calendar days or business days or even when these days start running. Is there a standard rule for how this works?”
IN MOST cases, a contract will have a list of definitions or an interpretation clause which will spell out exactly how a “day”, “week” or “month” in the contract must be interpreted and define the way in which the time period must be calculated in order to determine the expiry of a deadline.
However, where such definitions or interpretation guidance is not provided in the contract, our law provides for interpretation guidelines which can be applied to provide an answer.
Firstly, one must seek the common intention of the parties, based on the wording of the contract, with regards to the calculation of time periods.
If the intention of the parties cannot be determined, one would have to revert to what is known as the “civil method” for the computation of time.
This method for interpretation of “days” is to include the day on which the period begins to run and exclude the last day, unless there are special circumstances which justify a departure from this rule, in which case the natural method of computation will be used. One also has to consider the way in which a period is worded. Is the prescribed action required before or after the period or can it be any time within a period?
For example, if a lease agreement provides that the notice of extension of the lease can be provided in the last two months of the lease period, then this will allow notice of extension to be made at any time in the two-month period and not necessarily on the first or last day of the period.
Generally, the contract will provide sufficient guidance to be able to clearly establish what the relevant periods are. Should you, however, be uncertain or have doubts regarding the exact interpretation of time periods, it would be prudent to timeously consult your attorney for guidance, particularly if failing to meet deadlines could hold contractual repercussions for you or your business.