MIAMI BUSINESS LITIGATION: COURT INTERPRETATION OF CONTRACTS

Most contractual disputes involve parties that dispute the meaning of particular contract terms. Whether a party will prevail in a breach of contract case will often depend on the interpretation of terms or phrases within the contract. Peter Mavrick is a Miami business litigation lawyer, and also represents clients in business litigation in Fort Lauderdale, Boca Raton, and Palm Beach. The Mavrick Law Firm represents clients in breach of contract litigation, trade secret litigation, non-compete agreement litigation, employment litigation, trademark litigation, and other legal disputes in federal and state courts and in arbitration.

Contracts establish the rights and responsibilities between the parties agreeing to the contract. The question as to whether a contract establishes liability depends on the terms of the contract and what the parties intended.

Resolution of a contractual dispute is often dependent upon contract interpretation. Courts have established general rules for interpreting contracts in business litigation. “When interpreting a contract, the court must first examine the plain wording of the contract for evidence of the parties’ intent.” Perez-Gurri Corp. v. McLeod, 238 So. 3d 347 (Fla. 3d DCA 2017). “[W]ords in a contract are presumed to have been used with their ordinary and customary meaning.” Emergency Assocs. of Tampa, P.A. v. Sassano, 664 So.2d 1000 (Fla. 2d DCA 1995). “The expressed intent of the parties is the controlling factor. Intent unexpressed will be unavailing, and substantial ambiguity or doubt must be resolved against the person claiming the right to enforce the covenant.” McInerney v. Klovstad, 935 So. 2d 529 (Fla. 5th DCA 2006). “[A] court must construe a contract in a manner that accords with reason and probability; and avoid an absurd construction.” Kipp v. Kipp, 844 So.2d 691 (Fla. 4th DCA 2003).

In business litigation, a court interpreting a contractual provision will consider that provision within the context of the entire contract. “To ascertain the intention of the parties to a contract, the trial court must examine the whole instrument, not just particular portions, and reach an interpretation consistent with reason, probability, and the practical aspects of the transaction between the parties.” Macaw v. Gross, 452 So. 2d 1126 (Fla. 3d DCA 1984). Courts must “construe a contract as a whole so as to give effect, as here, to all provisions of the agreement if it can be reasonably done.” McArthur v. A.A. Green & Co. of Fla., 637 So.2d 311 (Fla. 3d DCA 1994).

“Additionally, a court may not interpret a contract so as to render a portion of its language meaningless or useless.” TRG Columbus Dev. Venture, Ltd. v. Sifontes, 163 So. 3d 548 (Fla. 3d DCA 2015); see also Moore v. State Farm Mut. Auto. Ins. Co., 916 So. 2d 871 (Fla. 2d DCA 2005) (“We will not interpret a contract in such a way as to render provisions meaningless when there is a reasonable interpretation that does not do so”). If business litigation arises over the meaning of a term in a contractual provision, courts generally consider how the term is used in other parts of the contract. Additionally, if there is a different term with a similar meaning, courts generally will presume that the two terms have different meanings. “As a general proposition, the use of different language in different contractual provisions strongly implies that a different meaning was intended.” Kel Homes, LLC v. Burris, 933 So. 2d 699 (Fla. 2d DCA 2006).

Whether a party is liable under a contract is dependent on the wording used in the contract. When corporations and other “fictious persons” sign contracts, they must do so through their employees and agents. An employee that signs a contract without specifically identifying that he is signing on behalf of the corporation can risk potentially being liable instead of, or, in addition to the corporation. The simple addition of the name of the corporation and the word “by” before the signature will usually ensure the employee is not a liable party under a contract. Delta Air Lines, Inc. v. Wilson, 210 So.2d 761 (Fla. 3d DCA 1968) (“It has been established that the signature of a corporate officer placed under the name of the corporation and preceded by the word ‘By’ does not create personal liability”).

In the recent business litigation ncase, Aleman v. Gervas, 3D19-2255, 2020 WL 6153442 (Fla. 3d DCA Oct. 21, 2020), the court was considering whether the contracting parties intended on being liable. The Aleman parties had equal ownership of a limited liability company that they desired to dissolve. They agreed to a contract which stated that “[t]he Parties will endeavor to restructure or liquidate this company and pay the amounts owed to [the plaintiff].” The Aleman plaintiff claimed that this provision meant that the agreeing parties were essentially guaranteeing the debt owed to the Aleman plaintiff.

Aleman disagreed, and affirmed the trial court’s judgment that the defendant was not liable. Aleman recognized that to “endeavor” usually means to attempt to do something rather than an obligation to successfully do it. Aleman also reviewed other provisions of the contract and found that the provisions creating personal liability used different language. Essentially, Aleman concluded that the parties agreed to attempt to pay off the debt using the proceeds of the company liquidation, but did not guarantee that full payment would be made. Had the Aleman defendant pocketed the proceeds of the sale, he may have been liable because he breached his agreement to attempt to make the payment. By agreeing to attempt to make payment but failing to make full payment, the Aleman defendant complied with the contract.

Aleman illustrates how important it is that contracting parties make their intentions clear to avert potential conflicts that may arise. Peter Mavrick is a Miami-Dade business litigation attorney who also practices business litigation in Fort Lauderdale, Boca Raton, and Palm Beach. This article does not serve as a substitute for legal advice tailored to a particular situation.