Contract interpretation: Do not expect courts to consider the contracting parties’ intent!

In a recent opinion, a Florida appellate court found the contract term “sale”, as related to the sale of property, included a foreclosure sale.  The contract provided payment would be due if any of three triggering events occurred, the first being “the sale of the property” located at a specific street address.  One party argued the contract contained an ambiguity requiring the court to look outside the words of the contract to determine whether the parties intended “sale” to include an involuntary sale, such as a foreclosure sale.  The appellate court rejected this argument, holding the clear definition of sale includes an involuntary sale of the property.

This case highlights the importance for religious organizations to pay close attention to contract terms when signing agreements.  It is a rare exception for a court to look past the language of a contract to consider the parties’ intent.  As recognized by the appellate court in holding “sale” to mean “any sale”, to consider parties’ intent for a contract term there would need to be either an “extrinsic fact or extraneous circumstances that changed the parties’ understanding of the contract,” or “the contract language would need to be susceptible to two different interpretations.”

If your religious organization has questions about what a contract term or provision means, do not assume you understand what you are signing. Get a lawyer’s advice before signing.  The ability to argue later that a court should look past the words in the contract and interpret the parties’ intent will usually fail.