Texas Contract Interpretation Principles

Bad Boy Agreement
09/10/2021

When it comes to interpreting contracts in the state of Texas, there are several principles that are used to determine the meaning of language within a contract. These principles are applied by courts when contract disputes arise, and they help to ensure that the parties involved are held to their agreed-upon terms.

The first principle is known as the “plain meaning” rule. This rule states that the words used within a contract should be given their plain, ordinary, and commonly understood meanings. This means that if a term has a commonly understood meaning, it should be interpreted in that way, even if it may not be the most technical or precise interpretation.

The next principle is known as the “course of performance” rule. This rule looks at how the parties have performed under the contract in question, and uses that performance as an indicator of the meaning of certain terms within the contract. For example, if the parties have consistently acted in a certain way that suggests a certain interpretation of a term, that interpretation may be used in determining the meaning of the term.

Another rule used in Texas contract interpretation is the “course of dealing” rule. This rule looks at how the parties have conducted themselves in previous dealings, even if those dealings were not specifically covered by the contract at hand. The idea is that if the parties have a consistent pattern of behavior when it comes to certain terms, that behavior can be used to interpret those terms in the current contract.

Another important principle is the “usage of trade” rule. This rule looks at how terms are commonly used within a particular industry or trade, and uses that usage as a guide for interpreting those terms within a contract. This is particularly important for contracts that involve technical or industry-specific language that may be unfamiliar to those outside of the industry.

Finally, there is the “ejusdem generis” rule. This rule applies when a list of specific items is followed by a more general term. In this case, the general term is interpreted to include only items of the same type as those specifically listed. For example, if a contract includes a list of specific types of goods, followed by the general term “and other materials,” the general term would only be interpreted to include other types of goods, not unrelated materials.

Overall, the principles used for interpreting contracts in Texas are designed to ensure that the parties involved are held to their agreed-upon terms, while also accounting for common usage, industry-specific language, and other factors that may affect the interpretation of contract language. As a professional, it is important to understand these principles when working with contracts and legal documents to ensure that the language is clear, precise, and reflects the intentions of the parties involved.

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