Opinion ID: 888353
Heading Depth: 1
Heading Rank: 11

Heading: Basic Principles of Contract Interpretation

Text: ¶ 30 The construction and interpretation of a contract is a question of law. Perf. Mach. Co., Inc. v. Yellowstone Mount. Club, 2007 MT 250, ¶ 39, 339 Mont. 259, ¶ 39, 169 P.3d 394, ¶ 39. A contract must be so interpreted as to give effect to the mutual intention of the parties as it existed at the time of contracting, so far as the same is ascertainable and lawful. Section 28-3-301, MCA. When a contract is reduced to writing, the intention of the parties is to be ascertained from the writing alone if possible.... Section 28-3-303, MCA. The whole of a contract is to be taken together so as to give effect to every part if reasonably practicable, each clause helping to interpret the other. Section 28-3-202, MCA. The language of a contract is to govern its interpretation if the language is clear and explicit and does not involve an absurdity. Section 28-3-401, MCA. Evidence of the circumstances under which a contract was made and the matter to which it relates may be considered, but such evidence is not admissible to add to, vary, or contradict the terms of the contract. Baker Revoc. Trust, ¶ 21. ¶ 31 Whether an ambiguity exists in a contract is also a question of law. Baker Revoc. Trust, ¶ 19. The existence of an ambiguity must be determined on an objective basis, and an ambiguity exists only if the language is susceptible to at least two reasonable but conflicting meanings. Perf. Mach. Co., ¶ 39. Mere disagreement as to the interpretation of a written instrument does not create an ambiguity. Creveling v. Ingold, 2006 MT 57, ¶ 8, 331 Mont. 322, ¶ 8, 132 P.3d 531, ¶ 8; see also Baker Revoc. Trust, ¶ 70 (`[A] conclusion of ambiguity is not compelled by the fact that the parties to a document, or their attorneys, have or suggest opposing interpretations of a contract, or even disagree as to whether the contract is reasonably open to just one interpretation.'  (quoting Richard A. Lord, Williston on Contracts vol. 11, § 30:4, at 51-54 (4th ed., West 1999)); Holmstrom v. Mutual Benefit Health & Accident Ass'n, 139 Mont. 426, 428, 364 P.2d 1065, 1066 (1961) (Ambiguity does not exist just because a claimant says so.). ¶ 32 Where the language of a contract is unambiguousi.e., reasonably susceptible to only one interpretationthe duty of the court is to apply the language as written. Ophus v. Fritz, 2000 MT 251, ¶ 23, 301 Mont. 447, ¶ 23, 11 P.3d 1192, ¶ 23. However, if the contract's language is ambiguous, a factual determination must be made as to the parties' intent in entering into the contract. Baker Revoc. Trust, ¶ 19. Where there is an ambiguity, the fact-finder may rely on extrinsic evidence to determine the parties' intent. Baker Revoc. Trust, ¶ 55; Ophus, ¶ 29; Carelli v. Hall, 279 Mont. 202, 209, 926 P.2d 756, 761 (1996). An ambiguity in a contract is generally construed against the drafter. Perf. Mach. Co., ¶ 39.