{"id":13213,"date":"2025-11-02T07:00:10","date_gmt":"2025-11-02T13:00:10","guid":{"rendered":"https:\/\/legaltalktexas.hammerle.com\/?p=13213"},"modified":"2025-10-31T12:40:43","modified_gmt":"2025-10-31T17:40:43","slug":"what-do-you-mean-contracts-can-turn-on-an-obscure-rule-of-construction","status":"publish","type":"post","link":"https:\/\/hammerle.com\/legaltalk\/real-estate\/what-do-you-mean-contracts-can-turn-on-an-obscure-rule-of-construction\/","title":{"rendered":"What Do You Mean? Contracts Can Turn on an Obscure Rule of Construction"},"content":{"rendered":"<p><span style=\"font-weight: 400;\">Understanding how <\/span><a href=\"https:\/\/hammerle.com\/practice-areas\/real-estate-lawyers\/\"><span style=\"font-weight: 400;\">contracts <\/span><\/a><span style=\"font-weight: 400;\">are interpreted can make or break a legal dispute. Even a small wording error can shift hundreds of thousands of dollars, as one borrower named Charlie found out the hard way.<\/span><\/p>\n<h2><b>A Costly Case of Contradictory Terms<\/b><\/h2>\n<p><span style=\"font-weight: 400;\">Charlie borrowed $1,700,000 from the bank to <\/span><a href=\"https:\/\/hammerle.com\/legaltalk\/real-estate\/using-a-real-estate-attorney-to-buy-a-house\/\"><span style=\"font-weight: 400;\">buy a home<\/span><\/a><span style=\"font-weight: 400;\">. He actually received the $1,700,000. No one disputed that.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">However, the bank made a mistake when it prepared the loan documents. In all of the documents, it said that the principal amount of the loan was:<\/span><\/p>\n<p><span style=\"font-weight: 400;\">\u201cONE MILLION SEVEN THOUSAND AND NO\/100 ($1,700,000.00) DOLLARS.\u201d<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Clearly, the written words contradicted the numerals. Had Charlie repaid the full $1,700,000 (with interest), it would not have been an issue. But Charlie repaid only $600,000. The bank called him in default, foreclosed on his house, then sued Charlie for the deficiency. Charlie responded that he owed them nothing because the principal amount of the loan was only $1,007,000.<\/span><\/p>\n<h3><b>The Surprising Outcome<\/b><\/h3>\n<p><span style=\"font-weight: 400;\">How did the case turn out? Charlie won.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">It turns out that there is a rule that written words control over numerals in a document that contains contradictory terms.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Surprised? Most people would be \u2014 because the rules of contract construction are not exactly dinner-table conversation. That\u2019s why this column explores some of the more interesting principles that can shape how contracts are interpreted in court.<\/span><\/p>\n<h2><b>Key Rules of Contract Construction<\/b><\/h2>\n<p><span style=\"font-weight: 400;\">Understanding the rules of contract interpretation can help you avoid disputes before they happen. Here are a few of the most common and consequential ones.<\/span><\/p>\n<h3><b>1. Written, Typed, and Handwritten Terms<\/b><\/h3>\n<p><span style=\"font-weight: 400;\">If an instrument contains contradictory terms, then typewritten terms prevail over printed terms, and handwritten terms prevail over both.<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">If a preprinted form required a $50 deposit, and the parties typed in \u201c$100 deposit,\u201d then the deposit is $100.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">If the parties handwrote \u201c$25 deposit,\u201d then the deposit is $25.<\/span><\/li>\n<\/ul>\n<h3><b>2. Words Take Their Ordinary Meaning<\/b><\/h3>\n<p><span style=\"font-weight: 400;\">Words in a <\/span><a href=\"https:\/\/hammerle.com\/practice-areas\/real-estate-lawyers\/real-estate-finance\/\"><span style=\"font-weight: 400;\">contract <\/span><\/a><span style=\"font-weight: 400;\">are given their ordinary or common meaning.<\/span><span style=\"font-weight: 400;\"><br \/>\n<\/span><span style=\"font-weight: 400;\">If a contract provided that the project would be completed by June 1st, then it means the project must be fully, not partially, completed by June 1st.<\/span><\/p>\n<h3><b>3. Clarifying Unclear Terms<\/b><\/h3>\n<p><span style=\"font-weight: 400;\">If an unclear term is used, then the court can consider:<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">How the parties have behaved under the contract<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">How they acted in prior contracts<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Common meanings within the industry<\/span><\/li>\n<\/ul>\n<p><span style=\"font-weight: 400;\">For example, if a drilling agreement pays \u201cper foot completed,\u201d the court will adopt the trade usage in the oil industry to clarify that term.<\/span><\/p>\n<h3><b>4. Material Terms Must Be Present<\/b><\/h3>\n<p><span style=\"font-weight: 400;\">A contract is unenforceable if it fails to contain all material and essential terms.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">If a seller agrees to sell \u201csome property in Dallas County\u201d without identifying which parcel or the price, the contract is unenforceable because it lacked material terms like price and property description.<\/span><\/p>\n<h2><b>Latin Rules of Construction: Impress Your Dinner Guests<\/b><\/h2>\n<p><span style=\"font-weight: 400;\">Interested in more rules? Let\u2019s take it up a notch \u2014 in Latin. These maxims of contract construction are ancient, but they still guide modern legal interpretation.<\/span><\/p>\n<h3><b>Noscitur a Sociis<\/b><\/h3>\n<p><i><span style=\"font-weight: 400;\">The meaning of a word or phrase is known from the words surrounding it.<\/span><\/i><\/p>\n<p><span style=\"font-weight: 400;\">If a clause refers to \u201cexplosion, rupture, or bursting of a pipe,\u201d then the word \u201cbursting\u201d is intended to mean a sudden failure like explosion or rupture \u2014 not a slow leak.<\/span><\/p>\n<h3><b>Ejusdem Generis<\/b><\/h3>\n<p><i><span style=\"font-weight: 400;\">General words following specific words are construed to include items of a similar nature.<\/span><\/i><\/p>\n<p><span style=\"font-weight: 400;\">If a contract granted use of \u201ctrucks, tractors, and other vehicles,\u201d then \u201cother vehicles\u201d refers only to <\/span><b>land-based motor vehicles<\/b><span style=\"font-weight: 400;\"> similar to trucks and tractors.<\/span><\/p>\n<h3><b>Contra Proferentem<\/b><\/h3>\n<p><i><span style=\"font-weight: 400;\">Ambiguity in a contract is construed against the drafter.<\/span><\/i><\/p>\n<p><span style=\"font-weight: 400;\">If an insurance company defined coverage for \u201csudden and accidental\u201d events, the phrase would be interpreted in favor of the insured, not the insurer.<\/span><\/p>\n<h3><b>Expressio Unius Est Exclusio Alterius<\/b><\/h3>\n<p><i><span style=\"font-weight: 400;\">The expression of one thing implies the exclusion of another.<\/span><\/i><\/p>\n<p><span style=\"font-weight: 400;\">If a lease states that the landlord will provide \u201cwater and electricity,\u201d then the omission of \u201cgas\u201d means the tenant must pay for it.<\/span><\/p>\n<h2><b>Final Thoughts: Why Contract Clarity Matters<\/b><\/h2>\n<p><span style=\"font-weight: 400;\">Some types of documents \u2014 such as <\/span><a href=\"https:\/\/hammerle.com\/practice-areas\/estate-planning\/wills\/\"><span style=\"font-weight: 400;\">wills <\/span><\/a><span style=\"font-weight: 400;\">\u2014 carry their own unique rules of construction. That, however, is <\/span><i><span style=\"font-weight: 400;\">pro alio die<\/span><\/i><span style=\"font-weight: 400;\"> (for another day).<\/span><\/p>\n<p><span style=\"font-weight: 400;\">The takeaway? Precision in drafting matters. From word choice to handwritten notes, every detail can influence how a contract is read \u2014 and who wins when disputes arise.<\/span><\/p>\n<h3><b>Plan Ahead: Ensure Your Contracts Protect You<\/b><\/h3>\n<p><span style=\"font-weight: 400;\">At Hammerle Morris Law Firm, we understand that even the smallest details in a contract can have significant <\/span><a href=\"https:\/\/hammerle.com\/practice-areas\/litigation-lawyers\/\"><span style=\"font-weight: 400;\">legal <\/span><\/a><span style=\"font-weight: 400;\">and <\/span><a href=\"https:\/\/hammerle.com\/practice-areas\/estate-planning\/\"><span style=\"font-weight: 400;\">financial consequences<\/span><\/a><span style=\"font-weight: 400;\">. Clear, precise language \u2014 and a solid understanding of the rules of construction \u2014 can prevent costly disputes and protect your interests.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Whether you\u2019re drafting a new agreement, reviewing an existing contract, or facing a disagreement over contract terms, our experienced attorneys can help ensure every word reflects your intent and safeguards your rights. Schedule a <\/span><a href=\"https:\/\/hammerle.com\/lewisville-attorney\/#form\"><span style=\"font-weight: 400;\">consultation <\/span><\/a><span style=\"font-weight: 400;\">today to gain clarity and confidence in your contracts \u2014 before a simple mistake becomes an expensive problem.<\/span><\/p>\n<p><i><span style=\"font-weight: 400;\">Virginia Hammerle is an accredited estate planner and represents clients in estate planning, probate, guardianship, and contested litigation. She may be reached at <\/span><\/i><a href=\"mailto:legaltalktexas@hammerle.com\"><i><span style=\"font-weight: 400;\">legaltalktexas@hammerle.com<\/span><\/i><\/a><i><span style=\"font-weight: 400;\">. This blog contains general information only and does not constitute legal advice.<\/span><\/i><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Understanding how contracts are interpreted can make or break a legal dispute. Even a small wording error can shift hundreds of thousands of dollars, as one borrower named Charlie found out the hard way. A Costly Case of Contradictory Terms Charlie borrowed $1,700,000 from the bank to buy a home. He actually received the $1,700,000. [&hellip;]<\/p>\n","protected":false},"author":5,"featured_media":13214,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":"","_links_to":"","_links_to_target":""},"categories":[28],"tags":[],"class_list":{"0":"post-13213","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-real-estate"},"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.6 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>What Do You Mean? 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