Legal Memorandum: Interpretation of Ambiguous Agreements in MN

Issue: Under Minnesota law, how does the court interpret an ambiguous agreement?

Area of Law: Business Organizations & Contracts
Keywords: Ambiguous agreement; Interpretation
Jurisdiction: Minnesota
Cited Cases: 276 N.W.2d 63; 566 N.W.2d 357; 296 N.W.2d 859; 161 N.W.2d 546; 621 N.W.2d 787; 465 N.W.2d 692; 567 N.W.2d 767
Cited Statutes: None
Date: 11/01/2004

The basic rule of contract interpretation applicable here is that the court’s primary role in interpreting a contract is to ascertain the parties’ intention and give effect to that intention.  Turner v. Alpha Phi Sorority House, 276 N.W.2d 63, 66 (Minn. 1979); Swanson v. Parkway Estates Townhouse Ass’n, 567 N.W.2d 767, 768 (Minn. Ct. App. 1997).  “To determine the intent of the parties, the court looks at surrounding circumstances and the parties’ own subsequent conduct.”  Fredrich v. Indep. Sch. Dist. No. 720, 465 N.W.2d 692, 695 (Minn. Ct. App. 1991).  The interpretation that the parties themselves place on the agreement is entitled to great weight or even controlling weight in ascertaining the agreement’s terms.  Id. at 696. 

A contract is considered ambiguous if, based on its language alone, it is susceptible to more than one interpretation.  Lamb Plumbing & Heating Co. v. Kraus-Anderson of Minneapolis, Inc., 296 N.W.2d 859, 862 (Minn. 1980); Swanson, 567 N.W.2d at 768.  When a contract is ambiguous, the court may look at extrinsic evidence to interpret it. Swanson, 567 N.W.2d at 768; Fredrich, 465 N.W.2d at 695.  Thus, in Lamb Plumbing, for example, the supreme court held that there was ambiguity in the parties’ contract as to which of two contractors was to supply the valves and the wall fittings.  Id., 296 N.W.2d at 862-63.  See Pine Valley Meats, Inc. v. Canal Capital Corp., 566 N.W.2d 357, 362 (Minn. Ct. […]

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