Any time you are a party to a contract, you face the risk of disagreeing with the other party about what a particular provision means. Disagreements of this kind invoke special rules of contract interpretation to help litigants and courts determine what the contract means. There are specific rules for interpreting written contracts if there is a dispute between parties. The courts will try to determine the intent of the parties at the time they originally entered into the agreement.
The courts will seek to understand the mutual intention of the parties when they entered into the contract. To understand the mutual intent of the parties, the court will start by looking at the contract itself. It is therefore of paramount importance that the contract is clear, defined, and free from vague language and ambiguity.
To determine if the contract meaning is clear and definite, the court will review the language and give words their ordinary meaning. If the words were used in their technical sense, the court will then determine how the words are used in that industry or profession to interpret their meaning, unless it is clear the parties did not intend for the words to have a technical meaning.
Interpretation of a Contract
In interpreting the contract, courts will begin with the four corners of the contract itself. Often, contract disputes can be resolved at that level of analysis. However, sometimes the court needs to look beyond the contract and consider context–the court can look at contemporaneous evidence such as emails, conversations, other contracts, or any other evidence in order to understand what a particular contract provision or term means.
Courts may also disregard certain contract terms if they were induced by fraud, or if they do not accurately reflect the intentions and understandings of the parties to the contract. For example, a term could be added to the contract before signing that one party is unaware of, or a typo can result in the purchase price on the contract being different from what the parties agreed to. In such situations, the court will look to evidence outside the contract in order to determine whether to enforce those provisions or reform them, or take some other action warranted by the problems.
Willow Creek Law is experienced in preparing a wide variety of contracts and in enforcing them in court. For more information about contract interpretation, contact our Sandy Law Firm, (801) 233-0606.