Contract Interpretation Part 1

 

By Albert L. Kelley

 

There are two decision makers in a court of law. The judge sits as the trier of law, and the jury is the trier of fact. If there is no jury, the judge sits as both. When there is a question as to the meaning of the language of a contract, both decision makers have a job.

 

 

If the language of the contract is not in question, the only issue is how the law affects the contract. This is a question for the judge. If the language is ambiguous, the jury must decide what is intended by the parties when they drafted the contract.

 

 

As we mentioned before, parole evidence (or verbal evidence explaining the contract) cannot be used to modify the terms of a contract. It can, however, be used to clarify the contract when the language of the contract is ambiguous.

 

 

The court will not, in most cases, rewrite the contract. The court will look at what a reasonable person would think the parties intended, based upon the experiences of the parties and the circumstances surrounding the contract. The words of a contract are given their ordinary meaning, unless there is proof otherwise. As an example, the word “lift” will be interpreted to mean “to raise up” rather than the British meaning of “elevator” unless the court has evidence that the British meaning was intended. If the word has special meaning in a trade, that meaning will be interpreted. Another example: If a lawyer agrees to prepare a “brief,” the court will not interpret that term to mean that they are going to sew a pair of underwear. In legal terms, a “brief” is a legal document, so the court will interpret the contract to mean that the lawyer is going to draft a legal document.

 

 

Sometimes contracts can be restricted by other contracts. When you buy computer software, you do not have the right to use it any way you want. It usually comes in an envelope with writing on the outside. This is called a “shrink-wrap license” and is an additional contract between the software company and the purchaser. By opening the envelope, you agree to the terms of that shrink-wrap license which may restrict what you can do with the software (For example it may state that you cannot use the software to create any commercial products).

 

 

There is an interesting situation in this area regarding employee handbooks. I will discuss employment law at a later date, but since we’re on contracts and supplemental material, I want to touch on this briefly now. If you have a job and the employer gives you a handbook, that handbook may or may not be a part of your employment contract. And it may not depend on the intent of the employer. The courts will look at how the manual is treated. If the court deems the employee manual to be part of the employment contract, the manual can only be modified if both the employer and employee agree. However, if the manual is just a statement of the policies of the employer, the employer may change it at will, whether the employee approves or not.

 

 

 

Al Kelley is a Florida business law attorney located in Key West and previously taught business law, personnel law and labor law at St. Leo University. He is so the author of “Basics of Business Law” (Absolutely Amazing e-Books). This article is being offered as a public service and is not intended to provide specific legal advice. If you have any questions about legal issues, you should confer with a licensed Florida attorney.

 

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