How Courts Perform Contract Interpretation

The block quote below from Healy v. Seattle Rugby, LLC et al., 15 Wn. App. 2d 539; 476 P.3d 583 (Nov. 23, 2020)) explains how courts perform contract interpretation in contract disputes.  

The purpose of contract interpretation is to ascertain the intent of the parties. Roats v. Blakely Island Maint. Comm’n, Inc., 169 Wn. App. 263, 274, 279 P.3d 943 (2012). Washington courts “follow the objective manifestation theory of contracts.” Hearst Commc’ns, Inc. v. Seattle Times Co., 154 Wn.2d 493, 503, 115 P.3d 262 (2005).  Under this approach, courts “focus on the agreement’s objective manifestations to ascertain the parties’ intent.”  Martin v. Smith, 192 Wn. App. 527, 532, 368 P.3d 227 (2016). When considering the language of a written agreement, we “impute an intention corresponding to the reasonable meaning of the words used.” Hearst Commc’ns, Inc., 154 Wn.2d at 503 (citing Lynott v. Nat’l Union Fire Ins. Co. of Pittsburgh, 123 Wn.2d 678, 684, 871 P.2d 146 (1994)).

The intent of the parties may be discovered from “‘the contract as a whole, the subject matter and objective of the contract, all the circumstances surrounding the making of the contract, the subsequent acts and conduct of the parties to the contract, and the reasonableness of respective interpretations advocated by the parties.’”  Tanner Elec. Coop. v. Puget Sound Power & Light Co., 128 Wn.2d 656, 674, 911 P.2d 1301 (1996) (internal quotation marks omitted) (quoting Scott Galvanizing, Inc. v. NW EnviroServices, Inc., 120 Wn.2d 573, 580-81, 844 P.2d 428 (1993)).

When contract provisions conflict, we will harmonize them to the extent possible. Kut Suen Lui v. Essex Ins. Co., 185 Wn.2d 703, 710, 375 P.3d 596 (2016). The purpose of this “harmonization” is to interpret the agreement in a manner that gives effect to all of the contract’s provisions. Nishikawa v. U.S. Eagle High, LLC, 138 Wn. App. 841, 850-51, 158 P.3d 1265 (2007). When the 
terms of an agreement truly conflict and, thus, harmonizing them is impossible, courts must “give effect to the manifest intent of the parties.” Green River Valley Found., Inc. v. Foster, 78 Wn.2d 245, 249, 473 P.2d 844 (1970) (citing Starr v. Mut. Life Ins. Co. of New York, 41 Wash. 228, 83 P.116 (1905)). Accordingly, effect is given to that provision which more nearly effectuates the purpose of the entire contract. Vance v. Ingram, 16 Wn.2d 399, 416, 133 P.2d 938 (1943). A contract term is ambiguous only when, viewed in context, two or more meanings are reasonable. GMAC v. Everett Chevrolet, Inc., 179 Wn. App. 126, 135, 317 P.3d 1074 (2014). When multiple meanings are reasonable, which meaning reflects the parties’ intent is a question of fact. GMAC, 179 Wn. App at 135. 

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