CONTRACT DRAFTING AND INTERPRETATION
Effective contract Drafting
The primary purposes of a written contract is to tell the parties (1) what they can and can’t do; and/or (2) what they have to do and when they have to do it.
A well drafted contract should also protect you when things don’t go as planned. Working with an experienced business lawyer is the best way to protect you from the rare “what if” scenarios.
Because of the give and take in most contract negotiations, it is important for you to review each key provision. It is particularly important to make sure you carefully review any business contracts and agreements that are written using boilerplate language. Signing a form contracts is almost certain to leave you in a losing position if things do not go as planned.
Contract litigation often involves disagreements over what the terms in a specific part of the contract actually mean. In Mississippi, the courts use a three step approach when it comes to contract interpretation. The first step is to read the contract to see if it unambiguously sets out what the parties agreed to do. The court will objectively read the written words the parties actually used. This is the best evidence of what was intended at the time the contract was signed. This is known as the “four corners test”. In most cases the court will not look beyond the four corners of the document in determining what the parties agreed to do.
If the judge cannot resolve the dispute after reading the four corners of the contract, then the court will apply the rules of contract construction. While there are many rules of contract construction, one of the most frequently used states that if the contract is subject to more than one fair reading, it is to be read in the way that is most favorable to the non-drafting party. Resolving the dispute at this point can also involve explaining an ambiguous provision taking into consideration the custom and practice in the specific industry.
If the judge is still unable to find resolve the dispute after applying the rules of contract construction, the parties will be allowed to present extrinsic evidence. Extrinsic evidence includes things like what the parties said during while negotiation of the contract. Once the court determines that extrinsic evidence is necessary, the decision about what the parties actually agreed to do will be decided by a jury.
Experienced Business Attorneys
To discuss how one of our lawyers can assist you with your business or contract matter, contact us online or call 601-957-3101.