AMI 2419 Contract Interpretation—Language of the Contract Should Be Interpreted as a Whole

If the contract is contained in more than one document, AMI 2420 should be given instead of this instruction.

“In seeking to harmonize different clauses of a contract, we should not give effect to one to the exclusion of another even though they seem conflicting or contradictory, nor adopt an interpretation which neutralizes a provision if the various clauses can be reconciled. The object is to ascertain the intention of the parties, not from particular words or phrases, but from the entire context of the agreement.” RAD-Razorback Ltd. Partnership v. B.G. Coney Co., 289 Ark. 550, 554, 713 S.W.2d 462, 465 (1986). In that case, the court harmonized separate sections of a single contract to determine the intention of the parties. Similarly, in Fryer v. Boyett, 64 Ark. App. 7, 11, 978 S.W.2d 304, 306 (1998), the court found that even though two contracts were subject to differing constructions, the trial court's interpretation was affirmed based upon the rule of construction that “[d]ifferent clauses of a contract must be read together and the contract construed so that all of its parts harmonize, if that is at all possible.”

In Carter v. Cline, 2011 Ark. 474, the court paraphrased this instruction in order to interpret a contract for the sale of a house that contained certain conditions, which were to occur before performance was required. In that case, the contract contained a condition that the buyer obtain financing and inform the seller within 10 days that financing had been approved. The buyer received a conditional commitment for financing and so informed the seller. However, that commitment was withdrawn by the lender prior to closing. In suing for breach, the seller argued that the condition had been met when the buyer provided the commitment for financing. The court disagreed, finding that the requirement that the buyer actually obtain financing was the “controlling condition” and, because this condition had not been met, performance of the contract was not required.