If relationships are the lifeblood of business, then the arteries that carry that blood must be contracts. Those documents, with varying degrees of formality, are designed to govern those essential business relationships.
They may be relatively simple and straightforward, dealing with routine and basic elements of a business, such as a storefront lease, or massively complex, as may occur with a large office/residential/retail development projects.
And with contracts, the importance of precision and comprehensiveness cannot be overstated. If difficulties begin to develop and your business relationship starts to deteriorate into business litigation, many of your options may be defined and constrained within the “four corners” of that document.
A case involving a Georgia chemical company may come down to how the words “meet or release” are interpreted by a court. The company’s largest customer had sued previously for the meaning of that term from the contract, and is apparently attempting to force the Georgia company to meet some other providers price for their products.
Contract law typically requires that a Georgia court cannot look beyond the contract for help in defining a term unless it is ambiguous within the contract. The court determines if the language in question is ambiguous, and it is only after it is ruled to be ambiguous that a court can look to other sources to clear up the ambiguity.
This is why definitions within a contract are very important. Key words and phrases need to be clearly defined, because if a dispute or difference of opinion develops latter, that definition will become of paramount importance.
All of this litigation has led to a negative effect on the company’s stock price. While a contract interpretation may be limited to the four corners of the document, the ramifications of disputes involving the contract can reach far beyond those corners.
Source: bizjournals.com, “Contract dispute clobbers company with big Georgia chemical plant,” Atlanta Business Chronicle, August 20, 2015