Contract Construction: Harmonize, and only if this is not possible, is there more than one reasonable interpretation of a contract such that a fact issue is created concerning the parties’ intent.
Before extrinsic evidence (any oral or written evidence outside the four corners of a contract) can be considered to contradict, vary or add to the terms of an unambiguous written agreement, absent pleading and proof of fraud, accident or mistake, Courts go through an exacting analysis to determine whether there is more than one reasonable interpretation of a contract such that a fact issue is created concerning the parties’ intent.
UNDER TEXAS STATE LAW, WHEN INTERPRETING A CONTRACT:
1. A court must examine the entire agreement in an effort to harmonize and give effect to all provisions of the contract so that none will be meaningless.
2. Generally, the parties to a contract intend every clause to have some effect and the Court may not ignore any portion of the contract unless there is an irreconcilable conflict.
3. We construe contracts from a utilitarian standpoint bearing in mind the particular business activity sought to be served or purpose sought to be achieved.
4. The intention of the parties as expressed within the “four corners” of the instrument governs. The intent that governs, however, is not the intent that the parties meant but failed to express, but the intent that is expressed.
5. The goal of ascertaining the express intentions of the parties requires that we examine the entire document and consider each part with every other part so that the effect and meaning of one part on any other part may be determined.
6. Each part must be considered with every other part and it is presumed the parties intended every clause to have some effect.
7. And we strive to give meaning to every clause to avoid rendering any portion meaningless.
8. No single provision will be controlling, rather all provisions will be considered with reference to the entire contract.
9. When harmonizing contract provisions, the terms stated earlier in the contract must be favored over subsequent terms.
10. On the other hand, we realize that irreconcilable conflicts do exist; therefore, when it is impossible to harmonize internally inconsistent expressions of intent, the court must give effect to the “controlling language” of the contract and not allow ambiguities to “destroy the key expression of intent” included within the contract’s terms.
11. “[i]t is a well established rule of construction that the specific language of an instrument controls over its general terms.
12. An unambiguous contract must be enforced as written, examining the entire document and giving terms their plain, ordinary, and generally accepted meaning unless the instrument shows that the parties used them in a technical or different sense.
13. Also, we give words their plain meaning unless it appears that this would defeat the parties’ intention.
14. Provisions which are apparently conflicting are to be reconciled and harmonized, if possible, by reasonable interpretation so that the entire agreement can be given effect.
15. A failure to include more express language of the parties’ intent does not create an ambiguity.
16. If there are two possible constructions, a construction rendering the contract possible of performance will be preferred to one rendering its performance impossible or meaningless.
17. Courts avoid, whenever possible and proper, an unreasonable, inequitable, or oppressive construction.
18. Courts will not declare a forfeiture unless they are compelled to do so by language which can be construed in no other way.
19. An ambiguity does not arise merely because parties to an agreement advance differing interpretations.
20. Uncertainty or lack of clarity is insufficient to render a contract ambiguous.
21. Whether a contract is ambiguous is a question of law for the court to determine by looking at the contract as a whole in light of the circumstances present when the contract was entered.
22. If there is no genuine uncertainty as to which of two or more meanings is correct in any of these phrases, there is no ambiguity.
23. An ambiguity exists only after the application of established rules of construction leaves an agreement susceptible to more than one meaning.
24. For an ambiguity to exist, both interpretations must be reasonable.
25. We must attempt to achieve a reasonable result consistent with the apparent intent of the parties.
26. It follows that parol evidence is not admissible to render a contract ambiguous, which on its face, is capable of being given a definite certain legal meaning. This rule obtains even to the extent of prohibiting proof of circumstances surrounding the transaction when the instrument involved, by its terms, plainly and clearly discloses the intention of the parties, or is so worded that it is not fairly susceptible of more than one legal meaning or construction.
27. Only after a contract is found to be ambiguous may parol evidence be admitted for the purpose of ascertaining the true intentions of the parties expressed in the contract. The following is an example of a latent ambiguity:
[I]f a contract called for goods to be delivered to “the green house on Pecan Street,” and there were in fact two green houses on the street, it would be latently ambiguous.