A Matter of Interpretation

Article December 28, 2000
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Many contract disputes involving the scope of work turn on the rules of contract interpretation. Such was the case in Lehman-Roberts Company v. State Highway Commission, 673 So. 2d 742 (Miss.1996) where the dispute was over the interpretation of language describing the payment for clearing adjacent to the highway project.

The contract language giving rise to the dispute was as follows: "The limits of clearing shall be 60 ft (horizontal measure) from the centerline, both left and right of centerline, as directed by the engineer. The area measured for payment for random clearing will be the acres actually cleared of trees and will not include any paved areas or any areas which do not contain trees." The dispute over the areas for which Lehman-Roberts would be paid arose early during contract performance.

Ambiguity

The trial court found there was some ambiguity in the contract; however, the key words are controlled by the phase "as directed by the engineer" and that the area measured for payment did not include any paved areas or any areas which do not contain trees. The trial court found that the area for payment initially in the contract was to be as directed by the engineer from tree line at the edge of the pavement outward to 60 ft from the centerline.

Although the area to be cleared was from the centerline, the area for payment was to be calculated only on the area that contained trees; therefore, for the first 40% of the contract, the correct computation would be from the centerline extending out 60 ft less 12 ft of pavement, less 12 ft of shoulder and the slope to the tree line, or 36 ft of the designated area.

The trial court further found that after an Oct. 5 meeting, the parties reached a new agreement, but that still the area was to be as directed by the project engineer.

On appeal, the Supreme Court of Mississippi noted that the most basic principle of contract law is that contracts must be interpreted by an objective, not subjective standard. A court must make a determination based on the language used, not the ascertainment of some possible but unexpressed intent of the parties.

Lehman-Roberts claimed that it was required to clear a 60-ft zone, from the center lane of the roadway out to the 60-ft limit of the clearing line, anywhere up and down the highway the engineer directed clearing. Lehman-Roberts interpreted the contract provisions as providing for payment for clearing the 60-ft zone, less pavement which was specifically excluded from payment. Lehman-Roberts also claimed that it understood that areas which "do not contain any trees," such as open fields, would not

The court noted that the parties clearly disagreed over the interpretation of the contract provision for payment; but, the disagreement did not make the contract ambiguous. The court concluded that Lehman-Roberts' interpretation was not reasonable. In the court's view, the language of the clause first sets out what must be cleared, and that is what is directed by the engineer.

The next part of the clause sets out what areas would be pay areas, and those are the areas not paved containing trees. Lehman-Roberts' interpretation would have the phase "any areas which do not contain trees" mean that the engineer would not direct them to clear such areas. Furthermore, Lehman-Roberts would have the phrase "payment for random clearing will be the areas actually cleared of trees" mean that they are entitled to payment based on a 48-ft width, no matter how many trees were at that

Finally, the court concluded that the fact that the area cleared was marked differently after October 1989 was of no consequence and that the trial court's conclusion that there was a change in the contract was not supported by the record. In reaching this conclusion the court noted that there was nothing that had been entered into evidence to suggest that the different marking had an effect upon what was actually cleared. However marked, the contract clearly provided that there would be no payme

Having concluded that Lehman-Roberts had been paid for clearing all areas containing trees is measured within a reasonable distance of the trunks of the trees in question, the court affirmed the decision of the trial court. On Lehman-Roberts appeal it reversed and remanded the case back to the trial court for consideration of the commission's appeal.

Comment

This case illustrates two important rules of contract interpretation. First, an interpretation must be reasonable based on an objective view of the contract language. If a contractor can overcome that hurdle, then the second rule of contract interpretation that ambiguities are constructed against the drafter of the contract will usually work in the contractor's favor.

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