Contract Interpretation is important to construction disputes. There are rules of legal rules of interpretation that allow evidence outside the four corners of the contract and others that that don’t allow extrinsic evidence. It can be a bit confusing.
GAR has, however, has supplied us with a basic set of guidelines that are embedded into the GAR Purchase and Sale Agreement itself. These give us a clear path to interpretation that settle issues in most cases.
On page 7 of the Purchase Agreement, at Exhibits and Addenda, you see the following language:
Exhibits and Addenda. All exhibits and/or addenda attached hereto, listed below, or referenced herein are made a part of this Agreement. If any such exhibit or addendum conflicts with any preceding paragraph (including any changes thereto made by the parties), said exhibit or addendum shall control:
So, if there is a conflict between the between the exhibit and the body of the contract, the exhibit controls
How about Special Stipulations? The Special Stipulations section includes the following language:
SPECIAL STIPULATIONS: The following Special Stipulations, if conflicting with any exhibit, addendum, or preceding paragraph (including any changes thereto made by the parties), shall control:
So, if there is a conflict between an Exhibit and a Special Stipulation or the main body of the contract, the Special Stipulation controls.
The rules can be combined into a clear hierarchy: The Special Stipulations control over the Exhibits, which control over the main body of the contract.
A good general rule to follow when drafting contracts is this: If a provision is important, put it into the most controlling section, the Special Stipulations.
Another rule to remember: Handwritten language controls over pre-printed language.
The Rules sometimes do not give a clear answer to a conflict. For example, what if 2 exhibits conflict, which controls? That’s when the intent of the parties and extrinsic evidence might be required. Thoughtful draftsmanship should avoid such situations, but it can happen. If there is ever a question of contract interpretation, call anyone on the Broker Team for help!
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