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Contracts II
South Texas College of Law Houston
Worley, John J.

I. Principles of Interpretation

A. Modified Objectivism

1. Corbin and Restatement 2d

a. Restatement 201

i. 201(1) – give effect to the parties’ shared meaning

ii. 201(2) – One party is innocent and the other party is somewhat at fault and knows or has reason to know that his contracting partner means something different than what he means so a contract is formed on the basis of the innocent party’s understanding

iii. 201(3) – Where there is a misunderstanding and neither party is at fault, there is no reason to prefer one party over the other. So, there is no contract

2. Joyner v. Adams

a. Rule of Law – The determination is whether a party to a contract had knowledge of the other party’s interpretation is essential to properly enforce a disputed provision of an agreement.

b. The contract should be enforced pursuant to the innocent party.

B. Contract Interpretive Maxims

1. Noscitur a sociis – The meaning of a word in a series is affected by others in the same series

2. Ejusdem generis – A general term joined with a specific one will be deemed to include only things that are like the specific one.

3. Expressio unius exclusio alterius – If one or more specific items are listed, without any more general or inclusive terms, other items although similar in kind are excluded

4. Ut magis valeat quam pereat – By this maxim an interpretation that makes the contract valid is preferred to one that makes it invalid

5. Omnia praesumuntur contra proferentem – If a written contract contains a word or phrase which is capable of two reasonable meanings one of which favors one party and the other of which favors the other, that interpretation will be preferred which is less favorable to the one by whom the contract was drafted

6. Interpret contract as a whole – A writing or writings that form part of the same transaction should be interpreted together as a whole

7. Purpose of the parties – The principal apparent purpose of the parties is given great weight in determining the meaning to be given to manifestations of intention or to any part thereof

8. Specific provision is exception to a general one – If two provisions of a contract are inconsistent with each other and if one is “general” enough to include the specific situation to which the other is confined, the specific provision will be deemed to qualify the more general one

9. Handwritten or typed provisio

ing to what the writing says is inadmissible

a. Rationale – The purpose of looking only at the document itself is to eliminate the unreliability of the parol evidence due to the “uncertain testimony of the slippery memory”

b. Example

-Thompson v. Libby – Where a contract is complete on its face, parol testimony is inadmissible to vary its terms

2. Integration

a. Complete Integration

i. The document is a full integration of the parties’ agreement. It is the last word of the parties and contains everything they have agreed to

ii. Examples

-Case 1 – There are no warranties concerning the quality of the goods.
-Parol Evidence – I guarantee that the logs are at least 80% hard wood.
-Inadmissible because parol evidence contradicts the writing

-Case 2 – The writing is silent concerning warranties and quality
-Parol evidence – I guarantee that the logs are at least 80% hard wood
-Inadmissible. The parol evidence supplements the writing.