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Plain-Meaning Rule

A principle used by courts in interpreting contracts that provides that the objective definitions of contractual terms are controlling, irrespective of whether the language comports with the actual intention of either party.

The plain meaning of the contract will be followed where the words used—whether written or oral—have a clear and unambiguous meaning. Words are given their ordinary meaning; technical terms are given their technical meaning; and local, cultural, or TRADE USAGE of terms are recognized as applicable. The circumstances surrounding the formation of the contract are also admissible to aid in the interpretation.

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