The first instinct of a business owner faced with a lawsuit may be to find the best attorney in town. That’s a good instinct, but even the best attorneys will tell you that a case begins long before anyone files suit. Protecting your business interests and prevailing in court begins with the basics: well-drafted employment agreements, corporate policies and contracts.
In the recent decision of High Steel Structures, Inc. v. Cardi Corporation, the Rhode Island Supreme Court reaffirmed these basic principles by highlighting the plain language of a contract as the basis for its decision. The case stemmed from a government contract for construction on an interstate highway. A subcontractor brought suit against the general contractor, seeking payment for a substantial amount of steel bracing used in the project. The general contractor brought the State of Rhode Island into the case for amounts allegedly owed to the subcontractor for the bracing.
The issue on appeal related to a contract provision for the price of the bracing. Importantly, the provision had been modified by an addendum requiring all costs associated with the bracing to be included in the general contractor’s bid. Evidently, the subcontractor failed to include those costs in its bid. The subcontractor then sought payment for amounts expended on the bracing. However, the Rhode Island Supreme Court concluded that the addendum’s plain meaning led to but one interpretation: the cost of the steel bracing should have been included in the initial bid. The Rhode Island Supreme Court specifically noted the subcontractor’s “vast experience and expertise” in bridge construction and public contracts, but stated that those factors were not “dispositive” to its interpretation of the plain contract language.
Though High Steel Structures involves the unique context of public bidding, its lessons on contract interpretation are critical for any business owner. In particular, the Rhode Island Supreme Court relied on dictionaries and principles of contract interpretation-not the subcontractor’s expertise in the field-to understand the relevant contract. Business owners cannot assume that court will accept an explanation of ambiguous contract terms merely because that’s “the way it’s always done.” Instead, relying on a well-drafted contract is the best first step to prevailing in a lawsuit. After all, the best offense is a good defense.
For information on protecting your business in the preparation of agreements and contracts or other business law issues, please contact Attorney Samantha Clarke at 401-824-5100 or [email protected] We welcome your comments, questions and suggestions.