Last Updated on December 12, 2022 by Anda Malescu
You may wonder what rules guide the courts in interpreting contracts? In the United States, if two parties fail to determine what the specific terms of a contract mean, then they may seek to have the courts review the contract by filing a lawsuit. Here we discuss contract interpretation in the United States and the rules that guide the courts in interpreting contracts. It is crucial to understand what rules guide the courts in interpreting contracts when there is a dispute over the terms, wording or definitions of the contract.
When the parties fail to determine what some specific terms in the contract mean, they can seek the court’s review. The court then engages in contract interpretation to define the disputed terms and words and find the meaning closest to the original parties’ intentions. The need for contract interpretation usually occurs when parties have made a mutual mistake or attached a different meaning to the terms and words in the contract.
In order to determine the parties’ intention, courts take into consideration if the intention can be determined and if the intention is lawful. The intention can be defined as the reason for which the parties entered into the contract.
In determining the contract language, courts usually give the words in the contract the plain ordinary meaning, unless the parties had clearly used it in a more technical way. If it is apparent from the face of the documents that the language was meant to be used in a technical sense, then the court looks at how those technical terms are often used in business and interpret that language in the way that it would most make sense for the contract.
Further, one of the most important rules that guide courts in the United States in interpreting contracts is the four corners rules. According to legal dictionaries, the four corners rule is a rule stating that if a document (a contract) appears on its face to be complete, no outside evidence may be used to challenge it. However, the number of states that accept the four corners rule is in decline. In many legal decisions, courts first look to the four corners of the agreement to determine the intentions of the parties. Courts deviate from the four corners of the document only if the contractual language is found to be ambiguous. Language is ambiguous if the words used to express the intent of the parties are insufficient so that the contract may be understood to reach two or more possible meanings.
Contract interpretation often requires skill and creativity on the part of the courts. The courts may have to examine many different underlying factors when determining the parties’ intentions. A business lawyer can help you draft, review, and edit a contract in order to make sure the parties are in full agreement. Also, if a lawsuit is filed, your lawyer can help explain how contract interpretation can impact the outcome of your case.
Contact us or schedule a consultation with your business attorney in Miami, Florida USA, to assist you with your contractual needs and help you better understand what rules guide the courts in interpreting contracts.
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