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Rosa Parks Circle in Downtown Grand Rapids, getting ready for Christmas.

Happy Friday!

A few weeks back I posted about a trial that I had involving a dispute over the interpretation of a real estate contract.

Back in December I posted about commercial leases and how courts will enforce the plain meaning of an “unambiguous” contract.

These posts encourage “clear drafting” of business contracts. Ambiguous contracts can cause disputes.

Disputes can cause lawsuits.

Lawsuits cause headaches and loss of money (attorney fees).

In response, someone made the comment “aren’t all contracts subject to interpretation?

The underlying question there is, if someone is disgruntled about a business contract “can’t someone just find a reason to sue?

My response (typical lawyer response) – “well, yes and no.”

Yes: People sue all the time. Anyone can file a lawsuit.

 Yes: Sometimes contracts are, unfortunately, subject to two reasonable interpretations”

Yes: Sometimes people will simply decide to disregard a contract because they believe it is to their economic benefit to do so (“efficient breach theory” – a discussion for another day)

However…

Courts have been clear that they will not simply construe an ambiguity in a contract when there isn’t one.

A Court may not rewrite clear and unambiguous language under the guise of interpretation.Henderson v State Farm Fire & Cas. Co., 460 Mich 348, 354 (1999).

Further, even if language is poorly drafted so long is there is only one reasonable interpretation, the court will enforce the contract as written.

If the contract, although inartfully worded or clumsily arranged, fairly admits of but one interpretation it is not ambiguous.” Meagher v Wayne State Univ. 222 Mich App 700,721-722 (1997).

 

When all is said and done, it makes good business sense to draft clear contracts.

Questions? Comments?

e-mail: Jeshua@dwlawpc.com

www.dwlawpc.com