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Contracts 101

Individuals and businesses deal with contracts every day.  Yet, a contract is not always a complex thing.  In fact, when creating a contract, one would be wise to adhere to the old adages, “less is more,” and “keep it simple.”

“The interpretation of contracts is governed by well-settled principles. The cardinal rule for the interpretation of contracts is to ascertain the intention of the parties and to give effect to that intention as best can be done consistent with legal principles. Stated another way, the central tenet of contract construction is that the intent of the contracting parties at the time of executing the agreement should govern. We ascertain the parties’ intentions from what was actually embodied and expressed in the instrument as written.”

Martin v. Milstead, 2013 Tenn. App. LEXIS 313, *4 (Tenn. App. 2013).

Ultimately, a contract must clearly state the parties’ agreement.  “A contract is ambiguous only when it is of uncertain meaning and may fairly be understood in more ways than one.”  Moore v. Moore, 603 S.W.2d 736, 738 (Tenn. App. 1980).  “If the contract is plain and unambiguous, the meaning thereof is a question of law, and it is the Court’s function to interpret the contract as written according to its plain terms.”  Bradson Mercantile, Inc., v. Crabtree et al., 1 S.W.3d 648, 652 (Tenn. App. 1999).

If there is a breach by either side, you must resort to the courts.  In that regard, damages for breach of contract are designed to do one thing.  “The purpose of assessing damages in a breach of contract suit is to place the plaintiff, as nearly as possible, in the same position he would have had if the contract had been performed.” Wilhite v. Brownsville Concrete Co., Inc., 798 S.W.2d 772, 775 (Tenn. App. 1990).  In many cases, but not all, the prevailing party is entitled to attorney fees for the lawsuit.

Be careful who you deal with.  Always see an attorney to create a top-notch agreement for you, on the front end.