How do Texas courts resolve disagreements about what the contract means or requires?

CONTRACT-CONSTRUCTION PRINCIPLES EMPLOYED BY COURTS WHEN ANALYZING CONTRACT PROVISIONS

"The construction of an unambiguous contract is a question of law for the court," which we review de novo. Tawes v. Barnes, 340 S.W.3d 419, 425 (Tex. 2011). "A contract is not ambiguous simply because the parties disagree over its meaning." Dynegy Midstream Servs., Ltd. P'ship v. Apache Corp., 294 S.W.3d 164, 168 (Tex. 2009). Rather, a contract is ambiguous only when "its meaning is uncertain and doubtful or is reasonably susceptible to more than one interpretation." Heritage Res., Inc. v. NationsBank, 939 S.W.2d 118, 121 (Tex. 1996). "When discerning the contracting parties' intent, courts must examine the entire agreement and give effect to each provision so that none is rendered meaningless." Tawes, 340 S.W.3d at 425.

When performing this review, no single provision will be given controlling effect; instead, all of the provisions must be considered in light of the whole agreement. Id. "In construing a written contract, the primary concern of the court is to ascertain the true intentions of the parties as expressed in the instrument." Valence Operating Co. v. Dorsett, 164 S.W.3d 656, 662 (Tex. 2005). Accordingly, we "give contract terms their plain and ordinary meaning unless the instrument indicates the parties intended a different meaning." Apache Corp., 294 S.W.3d at 168.

STANDARD OF REVIEW ON APPEAL

The construction of a contract is a question of law that we review de novo in light of the entire agreement. See Chrysler Ins. Co. v. Greenspoint Dodge of Houston, Inc., 297 S.W.3d 248, 252-53 (Tex. 2009).

Contract construction is a question that we review de novo, and when performing that task, we review the entire contract. See Greenspoint Dodge of Houston, Inc., 297 S.W.3d at 252-53.

SOURCE: AUSTIN COURT OF APPEALS - 03-10-00784-CV - 01/4/2013

The interpretation or construction of an unambiguous contract is a matter of law to be determined by the court. Am. Mfrs. Mut. Ins. Co. v. Schaefer, 124 S.W.3d 154, 157 (Tex. 2003). When interpreting a contract, our primary concern is to ascertain and give effect to the intent of the parties as expressed in the agreement. Seagull Energy E & P, Inc. v. Eland Energy, Inc., 207 S.W.3d 342, 345 (Tex.2006). To discern this intent, we examine and consider the entire writing in an effort to harmonize and give effect to all of its provisions so that none will be rendered meaningless. Id. No single provision taken alone will be given controlling effect; rather, all the provisions must be considered with reference to the whole instrument. Id. Interpretation of an insurance policy is governed by the same rules of construction applicable to other contracts. Nat'l Union Fire Ins. Co. v. CBI Indus., Inc., 907 S.W.2d 517, 520 (Tex. 1995).

SOURCE: HOUSTON COURT OF APPEALS - Nos. 14-10-00821-CV, 14-10-00856-CV, 14-10-01145-CV – 5/17/12 375 -  Garcia v. Bank of America Corporation, 375 S.W.3d 322 (2012)

How courts read contracts when asked to enforce them

CONTRACT CONSTRUCTION – GENERAL PRINCIPLES

When construing a written contract, a court is to determine and give effect to the intent of the parties as expressed in the instrument. See Coker v. Coker, 650 S.W.2d 391, 393 (Tex. 1983). Terms in a written contract are given "their plain, ordinary, and generally accepted meaning unless the instrument shows that the parties used them in a technical or different sense." Heritage Res., Inc. v. NationsBank, 939 S.W.2d 118, 121 (Tex. 1996). "`If the written instrument is so worded that it can be given a certain or definite legal meaning or interpretation, then it is not ambiguous and the court will construe the contract as a matter of law.'" Enter. Leasing Co. of Houston v. Barrios, 156 S.W.3d 547, 549 (Tex. 2004) (quoting Coker, 650 S.W.2d at 393).

SOURCE: BEAUMONT COURT OF APPEALS - No. 09-12-00073-CV - 2/21/2013
 

UNAMBIGUOUS CONTRACT

When a contract is not ambiguous, we construe it according to the plain meaning of its express wording and enforce it as written. Chapman v. Abbot, 251 S.W.3d 612, 616-17 (Tex. App.-Houston [1st Dist.] 2007, no pet.). Extrinsic evidence may not be used to create an ambiguity. See Balandran v. Safeco Ins. Co. of Am., 972 S.W.2d 738, 745. We may, however, examine the contract as a whole in light of the circumstances present when the contract was entered. See Transcontinental Gas Pipeline Corp. v. Texaco, Inc., 35 S.W.3d 658, 666 (Tex. App.-Houston [1st Dist.] 2000, pet. denied).

SOURCE: HOUSTON COURT OF APPEALS - No. 01-11-00460-CV – 2/14/2013

Whether a contract is clear or ambiguous makes a difference when it comes to litigation

   
The question whether there is ambiguity in contractual language impacts the admissibility of evidence outside the contract itself, which could otherwise not be considered under the parol [not parole] evidence rule. But often the parties disagree on whether ambiguity exists and the judge must make the call.
  

CONTRACT AMBIGUITY – OR ABSENCE THEREOF -- AND ITS IMPLICATIONS

  

Whether an agreement is ambiguous is a question of law for the court to decide by looking at the contract as a whole in light of the circumstances existing at the time the contract was entered. Coker v. Coker, 650 S.W.2d 391, 394 (Tex. 1983); Ganske v. Spence, 129 S.W.3d 701, 707 (Tex. App.—Waco 2004, no pet.).

  

An ambiguity does not arise simply because the parties interpret the contract differently. Seagull Energy E & P, Inc. v. Eland Energy, 207 S.W.3d 342, 345 (Tex. 2006); Lopez v. Munoz, Hockema & Reed, L.L.P., 22 S.W.3d 857, 861 (Tex. 2000). A contract is ambiguous when its meaning is uncertain and doubtful or is reasonably susceptible to more than one interpretation. Eland Energy, 207 S.W.3d at 345.

 
If the agreement can be given a certain or definite legal meaning or interpretation, it is not ambiguous, and we will construe it as a matter of law. Coker, 650 S.W.2d at 393. Moreover, a court will not change a contract merely because the court or one of the parties comes to dislike its provisions or thinks that something else is needed. Calpine Producer Servs., L.P. v. Wiser Oil Co., 169 S.W.3d 783, 787 (Tex. App.—Dallas 2005, no pet.).
 
We are not allowed to rely on parol evidence to ascertain the meaning of an unambiguous agreement. See Nat’l Union Fire Ins. Co. v. CBI Indus., Inc., 907 S.W.2d 517, 520 (Tex. 1995) (“Parol evidence is not admissible for the purpose of creating an ambiguity. Only where a contract is first determined to be ambiguous may the courts consider the parties’ interpretation . . . and admit extraneous evidence to determine the true meaning of the instrument.”).

SOURCE: WACO COURT OF APPEALS - 10-11-00257-CV – 12/7/11
RELATED LEGAL TERMS: contract construction, contract interpretation, ambiguous vs. unambiguous contractual provisions, parol evidence rule, 4-corners rule