Sunday, December 15, 2013

How do courts interpret contracts in Texas?


Basic Principles 

“[A] court interprets a contract by ascertaining the true objective intentions of the parties, based on the contract language.” SAS Inst., Inc. v. Breitenfeld, 167 S.W.3d 840, 841 (Tex. 2005) (citing Coker v. Coker, 650 S.W.2d 391, 393 (Tex. 1983)). A court construes written instruments as a whole in an effort to harmonize and give effect to all the provisions of the instrument so that none will be rendered meaningless. Valence Operating Co. v. Dorsett, 164 S.W.3d 656, 662 (Tex. 2005). Shell Oil Co. v. Khan, 138 S.W.3d 288, 292 (Tex. 2004). Contract terms are given their “plain, ordinary, and generally accepted meanings unless the contract itself shows them to be used in a technical or different sense.” Dorsett, 164 S.W.3d at 662. If a contract is capable of more than one reasonable interpretation, it is ambiguous; if, however, the contract can be given a certain or definite legal meaning or interpretation, then it is not ambiguous and we will construe it as a matter of law. Coker, 650 S.W.2d at 393; Cook Composites, Inc. v. Westlake Styrene Corp., 15 S.W.3d 124, 131 (Tex. App.—Houston [14th Dist.] 2000, pet. dism’d). 

SOURCE: Houston Court of Appeals 01-10-00141-CV 5/12/12
 LEGAL TERMS: contract construction (interpretation) of contractual provisions, terms of agreement

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