It's the Law: In some cases, courts can declare rights under a contract

Q: My neighbor and I wrote up a contract for me to buy his house. We now have a different interpretation of what it means. How do we find out who is right?

A: A contract is usually intended to embody the entire agreement between the parties. Even when attorneys draft contracts, there can be dispute. When inexperienced parties write up their own agreement, the chances for mistake and dispute substantially increase. What may sound right at the time you write it up and talk about may later prove to be ambiguous.

Assuming your disagreement cannot be settled amicably, you have two basic options with respect to court action. One option is to sue the other party to enforce your understanding of the contract. As part of that suit, the court will be required to resolve any questions about the contract language and enter a judgment in accordance with that language.

Your second option would be to file a lawsuit seeking a declaratory judgment. In that case, you argue that there is uncertainty or ambiguity concerning the contract which must be resolved so the parties will understand their rights and obligations.

In a declaratory judgment case, the pleading must show a bonafide adverse interest between the parties concerning a power, privilege, immunity or right, doubt about the existence or non existence of the power, privilege, immunity or right and show that the person requesting a judgment is entitled to have the doubt removed. You cannot merely seek a declaratory judgment because you are not sure about something. There must be an actual dispute between the parties.

As part of a declaratory judgment action, you can also ask for ancillary relief. You can ask the court to enforce the agreement after the court interprets it, seek damages or other appropriate relief.

One of the problems you may face is the parol-evidence rule. Although that is a rule of evidence, it has the force of substantive law. Under the parol evidence rule, a written document intended to be the final agreement between the parties may not be contradicted, modified or varied by oral testimony.

Florida law presumes that a written agreement says what it means and that the parties intended it to be the only evidence of their agreement. To introduce oral testimony about the intent or meaning, a party must establish that the contract is ambiguous and in need of interpretation. If the court agrees, the court will listen to the testimony of the parties about their intended meaning of the document or a part of the document.

In some cases, the argument about contract is based on oral agreements that were not embodied in the document. If the document does not address the oral agreement, the court may consider it. If the document contains a merger clause, the court is prohibited from considering prior oral agreements. A merger clause states that the written contract is the sole and exclusive agreement between the parties and that there are no unwritten promises.

Not using an attorney to draft your contract could prove a costly mistake. Do not repeat it by failing to obtain competent legal advice immediately to review and discuss the facts of your particular circumstances and the applicable law.

