Contract Interpretation: How Courts Resolve Ambiguities in Contract Documents

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Many construction disputes arise out of terms set forth in the contract. Unfortunately, many construction contracts were never reviewed by a construction attorney and are not models of clarity. Because many disputes are won or lost depending on the interpretation of the contract terms, it is imperative that those in the construction industry have in their skill set at least a basic knowledge of the rules and law governing contract interpretation.

One key issue in any contractual dispute is whether the court will allow the parties to introduce extrinsic evidence regarding how the subject contract should be interpreted. This evidence could include testimony from witnesses about what they thought the contract meant, e-mails or other correspondence discussing contractual terms, or evidence of how the parties conducted themselves under a separate contract containing similar provisions.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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