Legal principles for interpreting contractual intent

Under Italian law, judges utilize specific legal criteria to determine the true intent of contracting parties when written agreements are ambiguous or contradictory. Rather than relying solely on the literal meaning of words, the judiciary follows a structured process guided by the Civil Code to reconstruct the original agreement.

According to Article 1363 of the Civil Code, clauses must be interpreted in relation to one another, ensuring that the meaning of individual terms is consistent with the entire contractual context. This functional interpretation seeks to identify the 'concrete cause' of the transaction and the practical purposes intended by the parties.

Key principles in this process include the principle of good faith, which requires analyzing the actual conduct and behaviors of the parties involved. This approach prevents judicial decisions from becoming arbitrary by prioritizing the actual intentions and the context of the negotiations over a strictly literal reading of the text.