The intention of the parties may differ among themselves. In such case, the meaning placed on the contract by one party and known to be thus understood by the other party at the time shall be held as the true meaning.
(Orig. Code 1863, § 2720; Code 1868, § 2714; Code 1873, § 2756; Code 1882, § 2756; Civil Code 1895, § 3674; Civil Code 1910, § 4267; Code 1933, § 20-703.)
Law reviews.- For article, "The Parol Evidence Rule in Georgia," see 17 Ga. B.J. 49 (1954). For article discussing interpretation in Georgia of insurance policies containing evidentiary conditions, see 12 Ga. L. Rev. 783 (1978). For comment advocating liberal construction of indefinite employment contract, in light of Gray v. Aiken, 205 Ga. 649, 54 S.E.2d 587 (1949), see 1 Mercer L. Rev. 304 (1950).
JUDICIAL DECISIONS
Every rule of construction is subordinate to intention of parties to contract. Central R.R. & Banking Co. v. Mayor of Macon, 43 Ga. 605 (1871); Asa G. Candler, Inc. v. Georgia Theater Co., 148 Ga. 188, 96 S.E. 226, 1918F L.R.A. 389 (1918).
Contracts must always be construed with reference to intention of parties at time contract entered. McNaughton v. Stephens, 8 Ga. App. 545, 70 S.E. 61 (1911), and see Pidcock v. Nace, 15 Ga. App. 794, 84 S.E. 226 (1915).
Statute can have no application unless contract is ambiguous. Holloway v. Brown, 171 Ga. 481, 155 S.E. 917 (1930); Hoffman v. Louis L. Battey Post No. 4 of Am. Legion, 74 Ga. App. 403, 39 S.E.2d 889 (1946); Lovable Co. v. Honeywell, Inc., 431 F.2d 668 (5th Cir. 1970) (see O.C.G.A. § 13-2-4).
Statute has no application if contract and terms involved are not ambiguous. Village Enters., Inc. v. Georgia R.R. Bank & Trust Co., 117 Ga. App. 773, 161 S.E.2d 901 (1968); Crown Constr. Co. v. Opelika Mfg. Corp., 343 F. Supp. 1266 (N.D. Ga. 1972), modified, 480 F.2d 149 (5th Cir. 1973) (see O.C.G.A. § 13-2-4).
In a breach of contract suit, contract construction statute was inapplicable to support contractors' interpretation of the parties' agreement because the contract was not ambiguous, which was required for application of the statute. Stone & Webster, Inc. v. Ga. Power Co., F. Supp. 2d (DC Sept. 30, 2013).
When contracts are unambiguous it is error to submit construction to jury. State Hwy. Dep't v. MacDougald Constr. Co., 102 Ga. App. 254, 115 S.E.2d 863 (1960).
In construction of ambiguous contracts, circumstances are subjects of proof. National Manufacture & Stores Corp. v. Dekle, 48 Ga. App. 515, 173 S.E. 408 (1934).
When contract ambiguous, parties may show meaning placed upon contract by parties at execution.
- While it is true that unambiguous terms of complete written contract may not be added to, taken from, or varied by parol testimony, and that all negotiations between parties to such contract which either preceded or accompanied contract's execution are merged in the contract, where contract is ambiguous it is permissible for one or both parties to show meaning placed on contract by parties at time of contract's execution, and such construction will control. Florence v. State Hwy. Bd., 57 Ga. App. 752, 196 S.E. 86 (1938).
O.C.G.A. § 13-2-4 contemplates expression of meaning contemporaneous with execution of contract, and the statute does not indicate that an expression of meaning by one party years after such execution imposes any obligation upon the other party to object to such an expression. Smith v. Freeport Kaolin Co., 687 F. Supp. 1550 (M.D. Ga. 1988).
Silence as acquiescence in other party's construction.
- When a letter from one party to a contract to the other party showed that the writer placed a different construction on a contract than did the other party, the latter's silence was acquiescence in such construction. Salvatori Corp. v. Rubin, 159 Ga. App. 369, 283 S.E.2d 326 (1981).
Correspondence between parties is admissible on intent.
- Correspondence between the parties to a contract which tends to clarify or explain the intention of the parties is admissible to throw light on the meaning of the contract. Salvatori Corp. v. Rubin, 159 Ga. App. 369, 283 S.E.2d 326 (1981).
Contract free from ambiguity is conclusively presumed to express intention of parties. Foote & Davies Co. v. Southern Wood Preserving Co., 11 Ga. App. 164, 74 S.E. 1037 (1912).
Application in suit for breach of express warranty.
- Warranty being part of consideration of a contract, rule stated in this statute is applicable in suit for breach of express warranty. Postell v. Boykin Tool & Supply Co., 86 Ga. App. 400, 71 S.E.2d 783 (1952).
Section inapplicable to assignee misled as to meaning of contract.
- This statute has no application to assignee of contract, although one party sought to be bound by such understanding knew at time of contract's execution that such assignee would take assignment of contract under belief and expectation that contract had meaning different from that put upon contract by such party. Citizens & S. Bank v. Union Whse. & Compress Co., 157 Ga. 434, 122 S.E. 327 (1924).
When legal effect produced by words, and effect intended differ, true intention shall prevail. Especially is this true when one party is mistaken and other party is aware of mistake. White & Hamilton Lumber Co. v. Foster, 157 Ga. 493, 122 S.E. 29 (1924).
Language susceptible of various interpretations to be taken in sense meant by parties at execution.
- When language of written instrument may be fairly understood in more ways than one, the language should be taken in sense put upon the language by parties at time of instrument's execution, and court will hear evidence as to facts and surroundings. National Manufacture & Stores Corp. v. Dekle, 48 Ga. App. 515, 173 S.E. 408 (1934).
One party's understanding of contract terms is of no consequence unless other so understands. Atlanta S.R.R. v. City of Atlanta, 66 Ga. 104 (1880).
Testimony of one party as to that party's intent, undisclosed to other party, is incompetent.
- Even if instrument is ambiguous, testimony of one party as to that party's intent, undisclosed to the other, is not competent. National Manufacture & Stores Corp. v. Dekle, 48 Ga. App. 515, 173 S.E. 408 (1934).
Section applied when one acquiesces by silence to other party's stated interpretation.
- See Cason v. Duke, 28 Ga. App. 170, 110 S.E. 684 (1922).
Lessee's construction of lease, known to lessor who fails to make known disagreement, controls.- When lessee informs lessor, by means of three annual letters, of construction lessee is placing on provision of lease agreement, and receives no reply from lessor, lessor is precluded from relying on different interpretation, since it is incumbent upon the lessor to advise lessee that the lessor disagrees with lessee's construction of agreement. Wiggins v. Engelhard Minerals & Chems. Corp., 328 F. Supp. 33 (M.D. Ga. 1970), aff'd, 443 F.2d 1358 (5th Cir. 1971).
One party's understanding of trade, known to other party or that party's agent, is admissible.
- It is competent to show understanding of one party to trade on which that party acts, with full knowledge thereof in other party or other party's agent in connection with contract. Foley, Bro. & Co. v. Abbott & Bro., 66 Ga. 115 (1880).
Ambiguous insurance policy construed so as to effectuate intent of insured known to insurer.
- When evidence, in suit by insured against insurance company, indicates that intention of insured was to insure semi-trailer truck involved in accident, and that this intention was known to company through the company's agent who saw truck and took the truck's motor number which was inserted in policy, insurance contract would be construed to include semi-trailer truck, since contract was ambiguous, even though company insisted the company's policy did not cover semi-trailer trucks. American Cas. Co. v. Callaway, 75 Ga. App. 799, 44 S.E.2d 400 (1947).
Author of misleading provision may be bound by interpretation placed upon provision by other party.
- When written contract has apparent meaning at variance with contract's real meaning, the contract may bind author of ambiguity contrary to contract's real meaning, if this meaning was so obscurely expressed that other party was likely to be misled and was misled, and if circumstances entitled author to timely notice of author's mistake, and notice was not given. Hill v. John P. King Mfg. Co., 79 Ga. 105, 3 S.E. 445 (1887).
One acting as agent for principal who lacks legal status or existence becomes individually liable.
- It is a general rule that one who assumes to act as agent for principal who has no legal status or existence renders oneself individually liable on contracts so made. Hagan v. Asa G. Candler, Inc., 189 Ga. 250, 5 S.E.2d 739 (1939).
Where contract's subject matter regulated by federal law, parties cannot provide for interpretation otherwise.
- In cases where subject matter of contract is exclusively one of national cognizance and Congress has enacted a law for the matter's complete regulation, parties must be presumed to have contracted to the Act of Congress and the Act's effect on the subject matter, and the parties cannot, by agreement or otherwise, make any other law applicable in determining either nature, validity, or interpretation of contract. Federal Land Bank v. Shingler, 174 Ga. 352, 162 S.E. 815 (1932).
Section applied to offer to enter contract.
- See Columbus Bagging & Tie Co. v. Empire Mills Co., 38 Ga. App. 793, 145 S.E. 886 (1928).
Construction of consent judgment.
- Trial court erred in determining that a corporation was not a party to a consent judgment because the consent judgment was ambiguous, and the provision stating that judgment was not entered against the corporation "at this time" since the corporation was in bankruptcy implied that the entry of judgment was contemplated at a later time; the surrounding circumstances showed that the corporation filed a dismissal of the corporation's counterclaim with prejudice contemporaneously with the filing of the consent judgment, thereby manifesting an understanding that the corporation was included in, and obligated by, the consent judgment, and the corporation was listed as a defendant in the style of the case on the face of the consent judgment. Duke Galish, LLC v. Manton, 308 Ga. App. 316, 707 S.E.2d 555 (2011).
Summary judgment vacated due to existence of genuine issues of fact on construction of contract.
- Trial court erred by granting summary judgment to a bank because genuine issues of fact existed as to the bank's obligations under the loan contract such as whether the bank was not to record the security interests assigned to the bank except in the event of a default by the borrower, whether the bank breached a duty to cooperate with the borrower in foreclosing on the properties securing the underlying loans, and whether a duty on the bank to endeavor to timely review loan requests was meaningless. DJ Mortg., LLC v. Synovus Bank, 325 Ga. App. 382, 750 S.E.2d 797 (2013).
Cited in Chambers & Co. v. Walker, 80 Ga. 642, 6 S.E. 165 (1888); Finlay v. Ludden & Bates S. Music House, 105 Ga. 264, 31 S.E. 180 (1898); Peninsular Naval Stores Co. v. Parrish, 13 Ga. App. 779, 80 S.E. 28 (1913); City of Albany v. Georgia-Alabama Power Co., 152 Ga. 119, 108 S.E. 528 (1921); Bibb Realty Co. v. Fulghum & Co., 27 Ga. App. 378, 108 S.E. 554 (1921); Morris-Forrester Oil Co. v. Taylor, 158 Ga. 201, 122 S.E. 680 (1924); Hall v. Wingate, 159 Ga. 630, 126 S.E. 796 (1924); Buckeye Cotton Oil Co. v. Malone, 33 Ga. App. 519, 126 S.E. 913 (1925); Reeves v. B.T. Williams & Co., 160 Ga. 15, 127 S.E. 293 (1925); Slade v. Raines, 161 Ga. 859, 132 S.E. 58 (1926); Hall v. Vandiver, 37 Ga. App. 656, 141 S.E. 332 (1928); Googe v. York, 38 Ga. App. 62, 142 S.E. 562 (1928); Fireman's Fund Ins. Co. v. Davis, 42 Ga. App. 49, 155 S.E. 105 (1930); Fite v. Thweatt, 46 Ga. App. 82, 166 S.E. 682 (1932); Taber Mill v. Southern Brighton Mills, 49 Ga. App. 390, 175 S.E. 665 (1934); Atlanta Chem. Co. v. Hardin Bag Co., 49 Ga. App. 748, 176 S.E. 772 (1934); Polk v. Slaton, 54 Ga. App. 328, 187 S.E. 846 (1936); Trippe v. Crescent Farms, Inc., 58 Ga. App. 1, 197 S.E. 330 (1938); Shippen v. Georgia Better Foods, Inc., 79 Ga. App. 813, 54 S.E.2d 704 (1949); Arnold v. Johnston, 84 Ga. App. 138, 65 S.E.2d 707 (1951); Bell v. Fitz, 84 Ga. App. 220, 66 S.E.2d 108 (1951); Moore v. Johnson, 89 Ga. App. 164, 78 S.E.2d 823 (1953); Whitley v. Wilson, 90 Ga. App. 16, 81 S.E.2d 877 (1954); Chambliss v. Hall, 113 Ga. App. 96, 147 S.E.2d 334 (1966); Hardee's Food Sys. v. Bowers, 121 Ga. App. 316, 173 S.E.2d 439 (1970); Security Dev. & Inv. Co. v. Ben O'Callaghan Co., 125 Ga. App. 526, 188 S.E.2d 238 (1972); Consolidated Freightways Corp. v. Williams, 139 Ga. App. 302, 228 S.E.2d 230 (1976); Riviera Equip., Inc. v. Omega Equip. Corp., 155 Ga. App. 522, 271 S.E.2d 662 (1980); Wahnschaff Corp. v. O.E. Clark Paper Box Co., 166 Ga. App. 242, 304 S.E.2d 91 (1983); Georgia Glass & Metal, Inc. v. Arco Chem. Co., 201 Ga. App. 15, 410 S.E.2d 142 (1991); Eickhoff v. Eickhoff, 263 Ga. 498, 435 S.E.2d 914 (1993); McDuffie v. Criterion Cas. Co., 214 Ga. App. 818, 449 S.E.2d 133 (1994); Lothridge v. First Nat'l Bank, 217 Ga. App. 711, 458 S.E.2d 887 (1995); Tyson v. McPhail Properties, Inc., 223 Ga. App. 683, 478 S.E.2d 467 (1996); Dooley v. Dun & Bradstreet Software Servs., Inc., 225 Ga. App. 63, 483 S.E.2d 308 (1997); Brown v. Blackmon, 272 Ga. 435, 530 S.E.2d 712 (2000); Harris v. Distinctive Builders, Inc., 249 Ga. App. 686, 549 S.E.2d 496 (2001).
RESEARCH REFERENCES
Am. Jur. 2d.
- 17 Am. Jur. 2d, Contracts, §§ 18 et seq., 45.
ALR.
- Construction of contract for sale of commodity to the extent of the buyer's requirements, 7 A.L.R. 498; 26 A.L.R.2d 1099.
Circumstances other than relationship of parties which repel inference of an agreement to pay for work performed at one's request, or with his acquiescence, 54 A.L.R. 548.
Construction and application of provision of construction contract as regards retention of percentage of current earnings until completion, 107 A.L.R. 960.
Validity and construction of contract for exclusive representation of persons participating in, or connected with, entertainment enterprises, 175 A.L.R. 617.
Construction and effect of contract for sale of commodity to fill buyer's requirements, 26 A.L.R.2d 1099.
Size and kind of trees contemplated by contracts or deeds in relation to standing timber, 72 A.L.R.2d 727.
Who, as between landlord and tenant, must make, or bear expense of, alterations, improvements, or repairs ordered by public authorities, 22 A.L.R.3d 521.
CHAPTER 3 ELEMENTS AND FORMATION GENERALLY Article 1 General Provisions.- Formation and construction of sales contracts, §§ 11-2-201 et seq.,11-2-301 et seq.
RESEARCH REFERENCES
ALR.
- Validity and effect of stipulation in contract to effect that it shall be governed by law of particular state which is neither place where contract is made nor place where it is to be performed, 16 A.L.R.4th 967.
ARTICLE 1 GENERAL PROVISIONS
RESEARCH REFERENCES
Promise Made with Intent Not to Perform, 5 POF2d 727.
Offeree's Acceptance of Contract Offer, 27 POF2d 559.
Acts Constituting Rejection of Contract Offer, 27 POF2d 605.
Terms of Oral Contract with Decedent, 39 POF2d 91.
Act of God, 6 POF3d 319.