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Basic Rules of Construction
Contract Interpretation

The "four corners" method has been, and continues to be, the most widely accepted method of contract interpretation in the United States. It requires the court's (arbitrator's) acceptance of intrinsic and or parol evidence to attempt redefinition of contract terms.

Beyond the four corners test/rule, various well-known rules of contract interpretation are applied to test reasonableness during the interpretation process. See the following list:

The "Whole Agreement" Rule:
Simply put, the “whole agreement” or “harmonize” rule expresses the preference that the interpretation of the contract that renders all portions of the contract valid and enforceable, or in harmony, as opposed to rendering any portion of the contract superfluous, inoperative, or void, is preferred. In the majority of cases, the invocation of the “whole agreement” rule benefits owners over contractors because the rule typically operates to place upon contractors the obligation to perform work when any part or portion of the contract can be construed to require the work.

Specific Versus General Contract Terms:
This well-known and often used rule holds that specific terms and exact terms are given greater weight than general contract language.

Ordinary and Normal Meanings of Contract Language:
Pursuant to this rule, contractual language is to be given its normal and ordinary usage unless circumstances exist to consider alternative meanings.

Technical Meaning Governs Over Ordinary Meaning:
While contractual language is to be given its normal and ordinary meaning, some words have both an ordinary and technical meaning. This rule holds that courts interpreting contracts that contain words that have both ordinary and technical meanings should utilize the technical meaning unless evidence suggests that the parties intended otherwise.

Inclusion of One is Exclusion of the others:
This typically applies when lists of items or services are included in construction contracts. When disputes arise regarding scopes of work or materials to be provided, this rule can be invoked to demonstrate that the specific inclusion of lists of work and/or materials that are included in the scope of work demonstrates that the parties did not intend for work or materials that were not listed to be included in the scope of work.

Course of Dealing:
If the disputing parties have acted a certain way in interpreting similar language in the past, this “course of dealing” may be used to demonstrate that the parties intended to treat the disputed language in the same way.

Construing Ambiguities Against the Drafter:
Finally, many jurisdictions hold that contract ambiguities are construed against the drafter of the document, especially if the application of other rules of construction fails to resolve the issue.

These rules, as well as rules regarding the admission of extrinsic evidence, vary by jurisdiction.

Document Precedence

The contract (Construction Documents) are to be read as a whole. Explicit and succinct details have higher precedence than generalizations. Be sure and see if contract documents defines precedence.

Document

Order

Plans (Details, written words)

#1

Detail Specifications

#2

Plans (General, renderings)

#3

Special Conditions

#4

General Conditions

#5

Ambiguity and/or
Conflict

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Contributor

James G. Zack, Jr.
Executive Director
Navigant Construction Forum,
Navigant Consulting, Inc.
Website

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