Supreme Court of Texas Contract Interpretation Case
On November 2, 2023, the Supreme Court of Texas issued an opinion in U.S. Polyco, Inc. v. Texas Central Business Lines Corp. regarding contract interpretation. Specifically, the case involved a contract requiring further writings for certain land improvements to be made. The contract did not specify whether these further writings required within them the written agreement of the parties.
Because the contract did not have a clear meaning, the Court was forced to resort to methods of determining what the parties intended when entering into the contract. In arguments, the opposing sides unsurprisingly disagreed on the correct interpretation of the ambiguity, attempting to resolve the matter in their favor. The Court summarily decided that, due to the organization and structure of the contract and relevant provisions, additional written agreement between the parties would not be required for further writings dictated by the contract.
In this case, the Court was tasked with the difficult task of determining the objective meaning to the contract in light of the initial intentions of the parties. Because the contract was ambiguous, meaning more than one reasonable interpretation of its provisions could apply, the Court rightfully excluded extrinsic evidence of the parties’ subjective intent for the contractual terms.
The Supreme Court of Texas has granted review to many contract interpretation cases over the years, with Texas trial and appellate courts hearing far more. While this case is not groundbreaking, it showcases the difficulty borne by parties to an imprecise contract. Before this case was resolved, the trial court and appellate court reached differing conclusions, indicating the existing confusion.
Poorly drafted contracts often exclude important language which might not immediately seem relevant or, even worse, be unclear on the rights and obligations of the parties to the agreement. This leads to disputes between the parties and often proceeds to costly battles in court which were ultimately avoidable.
At Waldron & Schneider, our team of transactional attorneys is experienced in drafting, reviewing, and revising contracts to ensure that our clients are protected. It is prudent to craft holistic agreements that avoid the possibility of future litigation over a lack of clarity. Call our office today to speak with one of our attorneys about how we can help you.
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