2021 Georgia Code
Title 13 - Contracts
Chapter 2 - Construction
§ 13-2-2. Rules for Interpretation of Contracts Generally

The following rules, among others, shall be used in arriving at the true interpretation of contracts:

1. Parol evidence is inadmissible to add to, take from, or vary a written contract. All the attendant and surrounding circumstances may be proved and, if there is an ambiguity, latent or patent, it may be explained; so, if only a part of a contract is reduced to writing (such as a note given in pursuance of a contract) and it is manifest that the writing was not intended to speak the whole contract, then parol evidence is admissible;
2. Words generally bear their usual and common signification; but technical words, words of art, or words used in a particular trade or business will be construed, generally, to be used in reference to this peculiar meaning. The local usage or understanding of a word may be proved in order to arrive at the meaning intended by the parties;
3. The custom of any business or trade shall be binding only when it is of such universal practice as to justify the conclusion that it became, by implication, a part of the contract, except in regard to those transactions covered by Title 11;
4. The construction which will uphold a contract in whole and in every part is to be preferred, and the whole contract should be looked to in arriving at the construction of any part;
5. If the construction is doubtful, that which goes most strongly against the party executing the instrument or undertaking the obligation is generally to be preferred;
6. The rules of grammatical construction usually govern, but to effectuate the intention they may be disregarded; sentences and words may be transposed, and conjunctions substituted for each other. In extreme cases of ambiguity, where the instrument as it stands is without meaning, words may be supplied;
7. When a contract is partly printed and partly written, the latter part is entitled to most consideration;
8. Estates and grants by implication are not favored; and
9. Time is not generally of the essence of a contract; but, by express stipulation or reasonable construction, it may become so.

(Orig. Code 1863, §§ 1, 2721; Code 1868, §§ 1, 2715; Code 1873, § 1, 2757; Code 1882, §§ 1, 2757; Civil Code 1895, §§ 1, 3675; Civil Code 1910, §§ 1, 4268; Code 1933, § 20-704; Ga. L. 1962, p. 156, § 1; Ga. L. 1963, p. 188, § 38; Ga. L. 1964, p. 414, § 1; Ga. L. 2010, p. 878, § 13/HB 1387.)

The 2010 amendment, effective June 3, 2010, part of an Act to revise, modernize, and correct the Code, added "and" at the end of paragraph (8).

- For article, "The Parol Evidence Rule in Georgia," see 17 Ga. B.J. 49 (1954). For article, "The Parol Evidence Rule in Georgia - Part Two," see 17 Ga. B.J. 184 (1954). For article noting the effect of local business custom on warranties under the U.C.C., see 1 Ga. St. B.J. 191 (1964). For article discussing the advantages of contract rescission as a remedy for fraud, with respect to the parol evidence rule and the statute of frauds, in light of City Dodge, Inc. v. Gardner, 232 Ga. 766, 208 S.E.2d 794 (1974), see 11 Ga. St. B.J. 172 (1975). For article discussing interpretation in Georgia of insurance policies containing evidentiary conditions, see 12 Ga. L. Rev. 783 (1978). For article discussing parol evidence in the law of commercial paper, see 13 Ga. L. Rev. 53 (1978). For article surveying recent legislative and judicial developments in Georgia's real property laws, see 31 Mercer L. Rev. 187 (1979). For article, "Trial Practice and Procedure," see 53 Mercer L. Rev. 475 (2001). For annual survey of labor and employment law, see 56 Mercer L. Rev. 291 (2004). For annual survey of law of wills, trusts, guardianships, and fiduciary administration, see 56 Mercer L. Rev. 457 (2004). For note, "Misrepresentations and Nondisclosures in the Insurance Application," see 13 Ga. L. Rev. 876 (1979). For comment on Buchanan v. Hieber, 78 Ga. App. 434, 50 S.E.2d 815 (1948), see 12 Ga. B.J. 67 (1949). For comment on West View Corp. v. Alston, 208 Ga. 122, 65 S.E.2d 406 (1951), see 14 Ga. B.J. 230 (1951). For comment on Fisher v. J.A. Jones Constr. Co., 87 Ga. App. 317, 73 S.E.2d 587 (1952), see 4 Mercer L. Rev. 374 (1953). For comment on Burdines, Inc. v. Pan-Atlantic S.S. Corp., 199 F.2d 577 (5th Cir. 1952), an admiralty case treating a rubber stamp as a means of writing in construing a contract, see 4 Mercer L. Rev. 376 (1953).

ANALYSIS

• General Consideration
• Parol Evidence
• Construction of Words
• Custom and Usage of Trade
• Preference for Upholding Contracts
• Construction Against Party Executing Instrument
• Grammatical Construction
• Preference for Written over Printed Matter
• When Time Is of the Essence

OPINIONS OF THE ATTORNEY GENERAL

Meaning of term "qualified physical therapist" probably for judicial rather than jury determination.

- In determining meaning of term "qualified physical therapist," court would be inclined to decide question in favor of judicial construction rather than determination by jury. 1969 Op. Att'y Gen. No. 69-483.

RESEARCH REFERENCES

Am. Jur. 2d.

- 18 Am. Jur. 2d, Contribution, § 1. 21 Am. Jur. 2d, Customs and Usages, §§ 16 et seq., 27, 28, 30. 74 Am. Jur. 2d, Time, § 4.

- 17A C.J.S., Contracts, §§ 296, 302, 305 et seq., 318, 358 et seq., 597.

- Construction of contract as regards services contemplated by it where attorney claims compensation in addition to amount named therein, 2 A.L.R. 844.

Construction of provision for payment of premiums by insurer, 5 A.L.R. 1643.

Custom or previous dealing as imposing an obligation upon party to contract to accept something else in lieu of cash, 8 A.L.R. 1268.

Construction of provision for free gas in oil and gas lease, 9 A.L.R. 89.

Competency of parol evidence to show a money consideration additional to that stipulated in a written contract, 12 A.L.R. 354.

Meaning of "by" as fixing time for performance of an act or happening of an event, 12 A.L.R. 1168; 21 A.L.R. 1543.

What is "accident" within provision of bond or contract indemnifying against damage or injury to person or property by accident in performance of building or construction contract, 12 A.L.R. 1409.

Admissibility of parol evidence to show that a bill or note was conditional, or given for a special purpose, 20 A.L.R. 421; 54 A.L.R. 702, 75 A.L.R. 1519, 105 A.L.R. 1346.

Meaning of phrase "in good standing" employed in contract of mutual benefit association with member, 23 A.L.R. 340.

Construction of contract to pay commissions on all sales to customers obtained by other party, 23 A.L.R. 451.

Validity and construction of contract for sale of season's output, 23 A.L.R. 574.

Admissibility of parol evidence to vary or explain contract implied from the regular endorsement of a bill or note, 54 A.L.R. 999, 92 A.L.R. 721.

Meaning of phrase, "market price," or "current market price," as employed in contract, 55 A.L.R. 268.

What amounts to settlement of action within contractual provisions in relation to compensation of attorney, 55 A.L.R. 428.

Modification of sealed instrument by subsequent parol agreement, 55 A.L.R. 685.

Waiver by parol of provision in sealed instrument, 55 A.L.R. 700.

Validity, construction, and effect of provision reserving to seller the right to demand cash or satisfactory security in the event that buyer's credit or financial responsibility becomes impaired, 64 A.L.R. 1117.

Admissibility of parol evidence to explain ambiguity in description of land in deed or mortgage, 68 A.L.R. 4

Parol-evidence rule as applicable to agreement for improvements or alterations by vendor of real property, 68 A.L.R. 245.

Construction of contractual provisions as to interest as regards time from which interest is to be computed, 69 A.L.R. 958.

Motorcycle as within contract, statute, or ordinance in relation to motor cars, motor-driven cars, etc., 70 A.L.R. 1253.

May part performance of oral contract to convey be predicated upon possession or improvement by one spouse of real property of other, 74 A.L.R. 218.

Parol or extrinsic evidence to show that the parties to a written contract of sale of personal property merely describing the property as a class or subject contemplated a particular quality or kind, within the descriptive terms, 75 A.L.R. 1166.

Parol-evidence rule as affecting extrinsic evidence to show or to negative usury, 82 A.L.R. 1199; 104 A.L.R. 1261.

Contract granting timber rights as covering timber that becomes such, or reaches prescribed dimensions, after execution, but during period covered, 94 A.L.R. 1420.

"Contractual" consideration as regards parol-evidence rule, 100 A.L.R. 17.

Admissibility of parol evidence as to meaning of cryptic words, abbreviations, signs, symbols, or figures appearing in written contracts or other writings, 100 A.L.R. 1465.

Contract of sale which calls for a definite quantity but leaves the quality, grade, or assortment optional with one of the parties as subject to objection of indefiniteness, 106 A.L.R. 1284.

Parties or obligations to which time-of-essence clause in contract applies, 107 A.L.R. 275.

Construction and application of provision of construction contracts as regards retention of percentage of current earnings until completion, 107 A.L.R. 960.

Validity and construction of contract by labor unions to continue salary or wages in whole or part or pay benefits if other party loses employment or position because of joining union, 114 A.L.R. 1300; 125 A.L.R. 1260.

Validity, construction, and enforceability of provision of lease creating or reserving option or election for future enlargement, reduction, or other variation as regards the premises to be occupied by tenant, 129 A.L.R. 772.

What taxes are within contemplation of contract, which provides for payment or assumption of taxes or varies consideration with reference to taxes, 140 A.L.R. 517.

Parol evidence in relation to assumption of mortgage debt by grantee of mortgaged property, 143 A.L.R. 548.

Conflict between provisions of note and of conditional sale instrument in connection with note is given, 143 A.L.R. 591.

Parol evidence rule as applied to lease, 151 A.L.R. 279.

Time for exercise of reserved option to terminate, cancel, or rescind contract, 164 A.L.R. 1014.

Parol evidence rule as applied to question of easement by necessity or visible easement, 165 A.L.R. 567.

Validity and construction of contract for exclusive representation of persons participating in, or connected with, entertainment enterprises, 175 A.L.R. 617.

Factors and elements considered in fixing rental for extended or renewal term where renewal or extension clause leaves amount of rental for future determination, 6 A.L.R.2d 448.

Parol evidence rule as applicable to agreement not to engage in competition with a business sold, 11 A.L.R.2d 1227.

Contract by seller of business not to compete as affecting his lease of other property in restricted area to one who he knows will compete with purchaser, 14 A.L.R.2d 1333.

Failure to object to parol evidence, or voluntary introduction thereof, as waiver of defense of statute of frauds, 15 A.L.R.2d 1330.

Sufficiency of description in standing timber deed or contract, 35 A.L.R.2d 1422.

Applicability of parol evidence rule to written listing agreement of real-estate broker, 38 A.L.R.2d 542.

Parol evidence to show that lease of personalty, absolute on its face, is conditional sale, 57 A.L.R.2d 1076.

Conflict of laws as to usage and custom, with respect to interpretation or performance of a contract, 60 A.L.R.2d 467.

Applicability of parol evidence rule to agreement between stockbroker and customer, 60 A.L.R.2d 1135.

Admissibility of parol evidence with respect to reservations or exceptions upon conveyance of real property, 61 A.L.R.2d 1390.

Construction of clause in building contract that structure will comply with regulations, plans, or standards of the Federal Housing Administration or the Veterans' Administration, 67 A.L.R.2d 1017.

Time specified in real-estate contract for giving notice of exercise of option to purchase as of essence, 72 A.L.R.2d 1127.

Admissibility of extrinsic evidence to identify person or persons intended to be designated by the name in which a contract is made, 80 A.L.R.2d 1137.

Coverage and exclusions under hospital or medical service (Blue Cross-Blue Shield) contracts, 81 A.L.R.2d 927; 94 A.L.R.3d 990.

Admissibility of parol evidence as to limitation on cost structure in builder's action on written cost-plus-fee construction contract, 84 A.L.R.2d 1324.

Admissibility of oral agreement as to specific time for performance where written contract is silent, 85 A.L.R.2d 1269.

Admissibility of oral agreement respecting duration of employment or agency where written contract is silent, 85 A.L.R.2d 1331.

Validity, construction, and effect of contract between grower of vegetable or fruit crops, and purchasing processor, packer, or canner, 87 A.L.R.2d 732.

Effect of attempt to terminate employment or agency contract upon shorter notice than that stipulated in contract, 96 A.L.R.2d 272.

Effect of stipulation, in private building or construction contract, that alterations or extras must be ordered in writing, 2 A.L.R.3d 620.

Insurer's acceptance of defaulted premium payment or defaulted payment on premium note, as affecting liability for loss which occurred during period of default, 7 A.L.R.3d 414.

Parol exception of fixtures from conveyance or lease, 29 A.L.R.3d 1441.

Statements in promotional or explanatory literature issued by lessor to lessee as ground for relief from lease contract, 43 A.L.R.3d 1386.

Private pension plans: statements in literature distributed to employees as controlling over provisions of general plan, 50 A.L.R.3d 1270.

Liability of subcontractor upon bond or other agreement indemnifying general contractor against liability for damage to person or property, 68 A.L.R.3d 7.

Application of parol evidence rule in action on contract for architect's services, 69 A.L.R.3d 1353.

Construction contract provision excusing delay caused by "severe weather,", 85 A.L.R.3d 1085.

Timeliness of notice of exercise of option to purchase realty, 87 A.L.R.3d 805.

Lease provisions allowing termination or forfeiture for violation of law, 92 A.L.R.3d 967.

Construction and application of provision in health or hospitalization policy excluding or postponing coverage of illness for which medical care or treatment was received within stated time preceding or following issuance of policy, 95 A.L.R.3d 1290.

Division of opinion among judges on same court or among other courts or jurisdictions considering same question, as evidence that particular clause of insurance policy is ambiguous, 4 A.L.R.4th 1253.

Liability for injury or damage caused by snowplowing or snow removal operations and equipment, 83 A.L.R.4th 5.

Liability for breach of employment severance agreement, 27 A.L.R.5th 1.