Sure-Trip, Inc. v. Westinghouse Eng'g - 47 F.3d 526 (2d Cir. 1995)

Rule:

The intention of the parties to a contract is not derived from sentences or clauses read in isolation but from the instrument as a whole. Not only should the entire contract be considered but its parts must be reconciled, if possible. One part of a contract should not be read so as to render another part meaningless.

Facts:

The contract between plaintiff seller and defendant buyer provided that, if the buyer failed to purchase the agreed number of units based upon a three-month average, the seller was entitled to invoice the buyer for the difference between a discounted price and a higher list price. When the buyer failed to buy the specified units, the seller sued for profits lost by reason of alleged breach of the contract. The trial court granted summary judgment in favor of the seller on liability, found that the seller’s evidence of lost profits was inadequate, and used the seller’s income tax returns to determine and award an amount of lost profits that was substantially less than the amount claimed. The seller appealed and the buyer cross-appealed.

Issue:

Was a triable issue of fact presented by the ambiguous price term of the contract, thus, rendering the grant of summary judgment in favor of the seller erroneous?

Answer:

Yes.

Conclusion:

The court reversed the judgment, vacated the award, and remanded with a direction that the trial court consider extrinsic evidence to determine contractual intent. The relevant contractual provisions were inherently ambiguous and an issue of fact was raised precluding summary judgment on liability. The seller failed to meet its burden of proving the lost profits it claimed to have sustained.