Legal Memorandum: Interpretation of the Terms of a Contract

Issue: Under Minnesota law, how are the terms of a contract construed during a summary judgment motion?

To determine the applicable definition of a term, courts are to look first to its plain and ordinary meaning.  Brookfield Trade Ctr. v. County of Ramsey, 584 N.W.2d 390, 394 (Minn. 1998).  In the ordinary sense, a “purchase order” is generally defined broadly to cover any written expression of present intention to purchase a designated product.  See Interport Inc. v. Magaw, 135 F.3d 825, 829 (D.C. Cir. 1998); Sawant v. Ramsey, at *4 (D. Conn. Aug. 9, 2012) (“The phrase purchase order is self-defined, referring to an order to purchase goods and services.”). 

Assuming that a term is ambiguous, it is then susceptible to at least two reasonable interpretations, and, in such cases, construction of the term becomes a question of fact and summary judgment is not appropriate.  “It is generally recognized that summary judgment is not appropriate whe[n] the terms of a contract are at issue and any of its provisions are ambiguous or unclear.”  Donnay v. Boulware, 275 Minn. 37, 45, 144 N.W.2d 711, 716 (1966).  “This rule is intended to guarantee that the parties to a contract have a full opportunity to present evidence that will clarify or explain the unclear terms.”  In re Turners Crossroad Dev. Co., 277 N.W.2d 364, 368-69 (Minn. 1979).

Extrinsic evidence is not admissible unless the agreement is deemed to be ambiguous.  See City of Maple Grove v. Marketline Const., 802 N.W.2d 809, 815 (Minn. Ct. App. 2001); David […]