Opinion ID: 171042
Heading Depth: 3
Heading Rank: 1

Heading: Colorado Law of Contract Interpretation

Text: Under Colorado law, contracts should be interpreted consistently with the well-established principles of contractual interpretation. Allstate Ins. Co. v. Huizar, 52 P.3d 816, 819 (Colo.2002). Courts must examine [contractual] terms and attempt to determine the intent of the parties. East Ridge of Fort Collins, LLC v. Larimer & Weld Irrigation Co., 109 P.3d 969, 973 (Colo.2005). What courts are after is the parties' mutual intent. Pepcol Mfg. Co. v. Denver Union Corp., 687 P.2d 1310, 1313 (Colo.1984). Absent an indication the parties chose to deviate from plain meaning, the instrument's language must be examined and construed in harmony with the plain and generally accepted meaning of the words used. East Ridge, 109 P.3d at 974. In other words, common usage prevails, and strained constructions should be avoided. Allstate, 52 P.3d at 819. To determine the meaning of a contract, courts must examin[e] the entire instrument, and not ... view[ ] clauses or phrases in isolation. Id. But while every relevant provision must be considered and given effect, a more specific provision controls the effect of general provisions. E-470 Pub. Highway Auth. v. Jagow, 30 P.3d 798, 801 (Colo.Ct.App.2001), aff'd, 49 P.3d 1151 (Colo.2002). As an overarching principle, in construing a contract courts must also consider the subject matter, the object of making it, the sense in which the parties naturally understood it at the time it was made, and the purposes and objects to be accomplished thereby. Total Petroleum, Inc. v. Farrar, 787 P.2d 164, 167 (Colo.1990) (quotation and alteration marks omitted). When a contractual provision unambiguously resolves the parties' dispute, the interpreting court's task is over. It is axiomatic that in the absence of an ambiguity a written contract cannot be varied by extrinsic evidence. Pepcol, 687 P.2d at 1314. When, on the other hand, an ambiguity has been determined to exist, the meaning of its terms is generally an issue of fact to be determined in the same manner as other factual issues. East Ridge, 109 P.3d at 974. Extrinsic evidence, for example, becomes admissible to determine the meaning of a contractual provision at issue. This extrinsic evidence may include any pertinent circumstances attendant upon the transaction, including the conduct of the parties under the agreement. Pepcol, 687 P.2d at 1314. Courts in Colorado have found the conduct of the parties before the controversy arose to be a reliable test of their interpretation of the agreement. East Ridge, 109 P.3d at 975. Determining whether a written contract is ambiguous is a question of law. Id. It is not enough that the parties disagree about the meaning. Id. Rather, a contract is ambiguous [only] if it is fairly susceptible to more than one interpretation. Id. (quotation omitted). In guiding this determination, however, Colorado law no longer restricts the interpreting court to the four corners of the contract. Id. Where appropriate, extrinsic evidence may be conditionally admitted to determine whether the contract is ambiguous. Id. This evidence, though, must be stricken if the court, after considering the evidence, has determined no ambiguity exists. Pepcol, 687 P.2d at 1314 n. 3.