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La Real Estate Comm’n v. Butler - 04-1514 ( La. App. 3 Cir 04/06/05), 899 So. 2d 151

Rule:

Interpretation of a contract is the determination of the common intent of the parties. When the words of a contract are clear and explicit and lead to no absurd consequences, no further interpretation may be made in search of the parties' intent. Each provision in a contract must be interpreted in light of the other provisions so that each is given the meaning suggested by the contract as a whole. In case of doubt that cannot be otherwise resolved, a provision in a contract must be interpreted against the party who furnished its text.

Facts:

The Buyers, Dr. Brett Butler and his wife, Elizabeth, submitted a purchase agreement, offering to buy the Crockers’ home for the sum of $770,000.00. The agreement was signed by both parties, and a deposit of $12,500.00 was given by the Butlers. The contract stated that the sale was contingent on the butlers obtaining financing for the home, the amount of which was “to be determined,” at an eight and one-half percent interest rate. The Butlers applied for a loan through Red River Bank, but the loan was denied. Thereafter, the Butlers sought the return of their deposit. The Crockers refused. Based on this dispute, the Louisiana Real Estate Commission filed this concursus proceeding in the trial court below. The trial court found that no specific amount of funding was set out by the contract as a condition, only that the desired interest rate be secured. Noting that there was no evidence that the rate was not obtained, the trial court found that the Crockers were entitled to keep the deposit. The Butlers appealed, claiming that the trial court erred in awarding the Crockers the deposit due to the Butlers failing to seek a loan in any amount at the desired eight and one-half percent interest rate, that alternatively, there was no meeting of the minds as to the terms of the contract, and that the trial court erred in denying the Butlers attorney fees for breach of contract.

Issue:

  1. Were the Crockers entitled to keep the deposit due to the Butlers’ failure to complete the sale transaction?
  2. Were the buyers entitled to attorney fees?

Answer:

1) Yes. 2) No.

Conclusion:

Taken in conjecture with a provision in the contract which represented that the buyers had sufficient funds to complete the transaction, including any down payment, the appellate court found that the buyers failed to meet the obligations set out for them in the contract. Moreover, if there was any ambiguity in the contract, as the party who furnished the text in question, the "to be determined" provision in the contract had to be interpreted against the buyers, pursuant to La. Civ. Code Ann. art. 2056 . Thus, there was no error in the trial court's ruling awarding the sellers the deposit. Further, there was no evidence in the record of a mutual misunderstanding as to the terms of the contract. As such, the buyers were not entitled to attorney fees.

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