Every state has its own unique set of laws, statutes, codes, and case law, but the general rules of contract interpretation are largely consistent and generally apply to construction contracts.
The following, while not an all-inclusive list, are some of the most common rules that any non-lawyer in the construction industry in Texas should be aware of:
- The goal of contract interpretation is to ascertain and give effect to the parties’ intent as evidenced by the words of the contract.
- Courts interpret contracts based on the plain meaning of their provisions, giving words their ordinary, usual, and popular/dictionary meaning.
- Courts interpret contracts as a whole and, if possible, in a way that gives effect to all of their provisions.
- When parties list specific items in a document, any item not so listed is typically thought to be excluded.
- The parties’ subjective intent (i.e., what they believed) is irrelevant if the court can ascertain the parties’ intent from the words in the contract.
- Where general and specific provisions in a contract are inconsistent, the specific provision prevails.
- Unresolved ambiguities are usually construed against the party that drafted the contract.
- Extrinsic evidence (i.e., evidence outside the four corners of the contract) is generally inadmissible to show the parties’ intent. But, if the contract is ambiguous, a court may refer to extrinsic evidence to resolve the ambiguity. Such extrinsic evidence may include the parties’ course of performance or the facts and circumstances surrounding the transaction.
These general rules may be helpful to consider at the outset, when drafting a construction contract, to better understand what may happen if a dispute arises, but they are not a substitute for advice from an experienced construction law attorney. An experienced construction law attorney can guide you through the intricacies of Texas construction laws, protect your interests, and minimize the potential for disputes.
