Many business disputes involve the interpretation and the application of a contract. This is because business transactions typically involve a contractual relationship governing the rights, liabilities, risks, and recourse relating to the transaction. When there is a dispute regarding the transaction, this gives rise to a breach of contract claim.
It is important to understand that a trial court’s responsibility is NOT to rewrite the terms of a contract so that the risks are allocated differently. As explained:
[C]ourts are ‘powerless to rewrite [a] contract to make it more reasonable or advantageous to one of the parties…or to substitute [their] judgments for that of the parties to the contract in order to relieve one of the parties from the apparent hardships of an improvident bargain.
Underwater Engineering Services, Inc. v. Utility Board of the City of Key West, 194 So.3d 437, 444 (Fla. 3d DCA 2016) quoting Fernandez v. Homestar at Miller Cove, Inc., 935 So.2d 547, 551 (Fla. 3d DCA 2006).
For this reason, a trial court’s interpretation of a contract is reviewed on appeal with a de novo standard of appellate review – the appellate court will refer to the record in the trial court anew (de novo) without giving deference to the trial court’s findings.
For example, in Underwater Engineering Services (a case I discussed here), the trial court found that a contractor defectively constructed a portion of its work and awarded damages to the owner for replacing the defective work. On appeal, however, the appellate court looked at the underlying contract between the owner and the contractor that required the owner to give the contractor notice before replacing defective work. (The trial court’s final judgment did not reference this contractual provision or provide any application of the provision). The trial court’s record established that such notice was never given to the contractor so the contractor was never in a position to replace the defective work. Based on this contractual provision–remember, courts are not there to rewrite parties’ contracts–the appellate court reversed the trial court’s findings / judgment in favor of the owner because the owner never provided the contractor the required notice per the unambiguous language in the contract.
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