What a contract means with regard to the mutual rights and duties of the parties to that contract, depends on what provisions the contract contains (incorporation), how these provisions should be construed (interpretation) and how issues not addressed in the contract should be governed (supplementation).

Statutory provisions regarding incorporation, interpretation and supplementation exist, albeit to a limited extent. The approach of Swedish law to these issues is therefore largely based on the precedents set by the Supreme Court.

The signing of the contract, in effect, decides its content. At present, standardized terms and conditions, or to be more exact, terms and conditions that have not been individually negotiated, can be incorporated into a contract in a simplified manner. These simplifications are justified by practical consideration of closing a deal more efficiently, and thereby reducing transaction costs. The incorporation of these terms and conditions therefore largely require only that the other party has been given a realistic opportunity to read them and does not object to them. Unexpected and burdensome terms, however, need to be clarified.

Where the wording of the contract is ambiguous, and sometimes, even where the wording is clear from a linguistic perspective, the contract will need to be interpreted when a dispute arises. This interpretation follows a hierarchical order of preference. First, subjective interpretation is applied. If this cannot be done, then objective interpretation is used, and as a last resort, presumptions and the ambiguity rule will be applied.

Subjective interpretation is based on the actual intent of the parties upon entering into the contract, either by proof either that they had the same opinion, or that the opinion of first party was clear to the second party, and the second party did not object (the dolus rule). Objective interpretation is based on what can typically be assumed to have been the intent of the parties, given that they are reasonable people. In summary, this can be described as a balancing of arguments that relate to the purely linguistic meaning, the purpose of the contract and the reasonability of the results. Nine times out of ten, the Supreme Court uses this approach to resolve problems in interpretation. In one or two of a hundred cases, objective interpretation results in two opposing interpretations that are both reasonable. In such cases, the contract is interpreted to the detriment of the party that is deemed to be most responsible for the ambiguity.

If interpretation fails to reach a convincing result, the issue in dispute is then deemed not to be governed by the contract, and will instead be resolved by supplementation, which is most commonly, the application of dispositive (optional) law.