Michigan

How Will a Michigan Court Interpret Your Contract if There Is a Dispute As to Its Meaning?

Many people assume that when they have a written contract with someone else that any disputes about their agreement will be resolved simply by reading the contract itself. Sometimes this instinct is right. Indeed, Michigan state courts and federal courts applying Michigan law have generally ruled that the most reliable indication of the parties? intent is the language of the contract itself.

It is basic Michigan law that courts must avoid allowing into the evidentiary record outside evidence of the parties? intentions because this often leads to contract interpretations that are contradictory to the parties' true intent. This means that when the language in a contract is unambiguous, the parties? intent is to be discerned from the actual language used in the contract. Court use an objective standard to evaluate the meaning of the contractual language.

However, if a court declares a provision in a contract to be ambiguous, then outside evidence may be allowed to prove the parties' intent. Michigan law further provides that an ambiguous provision in a contract is to be construed against the party who drafted it.

The rules that Michigan courts use to interpret contracts are meant to accomplish one thing: figure out what the parties intended when they drafted their contract. All important contracts should be prepared or at least reviewed by an experienced and knowledgeable Michigan contracts lawyer. Involving an attorney early in the contract preparation/review process could mean the difference between having a contract that is enforceable according to the parties' expectations and intent, and one that could lead to totally unpredictable results if there is a dispute.

Full post as published by Michigan Business Lawyer Blog on March 05, 2008 (boomark / email).