The application of contracts

Abstract The application of a contract involves ascertaining whether the components of a contract term are met on the facts. It is a matter of categorisation or classification. There are at least three methods of categorisation: by criteria; by factor-balancing; and by analogy. The process of application is distinct from the processes that are engaged to define contract terms, including in particular interpretation. However, both the process of application and the process of interpretation address problems of linguistic indeterminacy, that is, cases where the words do not fit the facts. And these problems are usually resolved through interpretation; the relevant term is defined with such specificity that it is clear how it is to be applied. It is only when the court cannot define the term precisely that the court engages in categorisation or classification in a complex and meaningful way.