When business relationships go awry, parties can wind up in legal disputes. However, the outcome of commercial litigation can turn on the interpretation of parties’ written contracts. Disputes over parties’ respective contractual rights and responsibilities often underpin commercial litigation in Michigan. Understanding your legal options can help you navigate a disagreement over the interpretation of terms in your business contract.
Common Causes of Contract Interpretation Disputes
Some of the top causes of contract interpretation disputes in commercial litigation include:
- Ambiguous or vague language
- Conflicting or contradictory contract clauses
- Disagreements over the meaning of industry-specific terminology
- Changes in business practices or industry standards not reflected in the contract
- Reliance on oral agreements, modifications, or communications outside of the contract
How Michigan Courts Interpret Contracts
Michigan courts rely on various rules and legal doctrines when interpreting the meaning of contractual provisions in commercial litigation. Key doctrines governing contract interpretation include:
- Plain Language Rule – The plain language rule instructs courts first to consider the plain and ordinary meaning of contract terms when interpreting contractual provisions.
- “Four Corners” Rule – The “four corners” rule requires courts to restrict their consideration to the language in a written contract unless a court finds that a contractual term suffers from ambiguity.
- Parol Evidence Rule – The parol evidence rule generally prohibits the admission of evidence from outside the contract, such as statements made during contract negotiations, to alter or interpret the meaning of unambiguous contractual terms.
- Contractual Ambiguity Rule – A court may find a contract term ambiguous if it has two or more reasonable meanings that conflict with one another. If a contract term suffers from ambiguity, courts may look to evidence outside of the contract, such as the parties’ statements during negotiations or their conduct before signing the contract and during the contractual relationship.
- Contra Proferentem – Under this rule, a court may construe an ambiguous contract term against the party that wrote the term, which means the court may accept the opposing party’s interpretation or adopt an interpretation that disfavors the drafter.
Legal Strategies for Resolving Interpretation Disputes
Resolving contract interpretation disputes in commercial litigation may involve various legal strategies, such as:
- Alternative Dispute Resolution – Parties may seek to resolve disagreements over the meaning of contract terms through alternative dispute resolution mechanisms like informal negotiations or mediation. The contract may also require parties to submit disputes over the interpretation of the agreement to mediation or arbitration.
- Declaratory Judgment Actions – Parties may pursue declaratory judgment actions to ask the court to resolve a contract interpretation dispute by determining the meaning of contract terms, which can inform the parties how they should perform under their agreement.
- Expert Testimony – A party may present expert testimony to explain the meaning of technical language or industry-specific terminology.
- Citing Course of Dealing or Past Performance – A party may advocate for a particular interpretation of a contract term by highlighting how the parties have operated in their business relationship.
Why Legal Counsel Is Essential
Hiring legal counsel for a contract interpretation dispute can help you avoid or resolve a disagreement over a commercial agreement. Knowledgeable attorneys can assist with contract drafting by creating unambiguous terms that can prevent interpretation disputes. Attorneys can also use their legal knowledge to help parties understand the meaning of terms in their agreements. Finally, legal counsel can advocate for parties’ interests during legal disputes or litigation to resolve ambiguous contract provisions.
Contact a Commercial Litigation Attorney Today
If you find yourself in commercial litigation over the meaning of terms in your business contract, having experienced legal representation can help you protect your rights and interests. [Contact August Law, PLLC](/contact/), today for a confidential consultation with a knowledgeable commercial litigation attorney to discuss your options for pursuing a favorable resolution.