Many disputes arising under commercial agreements turn upon the interpretation of the agreement. Interpretation is the process by which a court ascertain in meaning that it will give to the language used by the parties in determining the legal effect of an existing agreement. It also involves questions as to whether additional duties or excuses will be implied. In addition, interpretation can be relevant to contract formation since courts may be forced to determine the meaning of communication used by the parties before they determine whether the parties have reached an agreement. To some extent, how the judges interpret the terms of the contracts can reallocate the rights and duties of the parties. Besides, with the improvement of the relations between China and the United States, an understanding of Chinese approaches towards contract interpretation and American approaches in the same field is necessary for the implementation of desired trade relations.