CACI No. 314. Interpretation - Disputed Words

Judicial Council of California Civil Jury Instructions (2022 edition)

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314.Interpretation - Disputed Words

[Name of plaintiff] and [name of defendant] dispute the meaning of the

following words in their contract: [insert disputed language].

[Name of plaintiff] claims that the words mean [insert plaintiff’s

interpretation]. [Name of defendant] claims that the words mean [insert

defendant’s interpretation]. [Name of plaintiff] must prove that [his/her/

nonbinary pronoun/its] interpretation is correct.

In deciding what the words of a contract mean, you must decide what

the parties intended at the time the contract was created. You may

consider the usual and ordinary meaning of the language used in the

contract as well as the circumstances surrounding the making of the

contract.

[The following instructions may also help you interpret the words of the

contract:]

New September 2003; Revised December 2014

Directions for Use

Give this instruction if there is conflicting extrinsic evidence as to what the parties

intended the language of their contract to mean. While interpretation of a contract

can be a matter of law for the court (Parsons v. Bristol Development Co. (1965) 62

Cal.2d 861, 865 [44 Cal.Rptr. 767, 402 P.2d 839]), it is a question of fact for the

jury if ascertaining the intent of the parties at the time the contract was executed

depends on the credibility of extrinsic evidence. (City of Hope National Medical

Center v. Genentech, Inc. (2008) 43 Cal.4th 375, 395 [75 Cal.Rptr.3d 333, 181 P.3d

142].)

Read any of the instructions (as appropriate) on tools for interpretation (CACI

Nos. 315 through 320) after reading the last bracketed sentence.

Sources and Authority

• Contract Interpretation: Intent. Civil Code section 1636.

• Contracts Explained by Circumstances. Civil Code section 1647.

• “Juries are not prohibited from interpreting contracts. Interpretation of a written

instrument becomes solely a judicial function only when it is based on the words

of the instrument alone, when there is no conflict in the extrinsic evidence, or a

determination was made based on incompetent evidence. But when, as here,

ascertaining the intent of the parties at the time the contract was executed

depends on the credibility of extrinsic evidence, that credibility determination

and the interpretation of the contract are questions of fact that may properly be

resolved by the jury.” (City of Hope National Medical Center,supra, 43 Cal.4th

113

at p. 395, footnote and internal citations omitted.)

• “This rule - that the jury may interpret an agreement when construction turns on

the credibility of extrinsic evidence - is well established in our case law.

California’s jury instructions reflect this (Judicial Council of Cal. Civ. Jury

Instns. (2008) CACI No. 314) . . . , as do authoritative secondary sources.”

(City of Hope National Medical Center,supra, 43 Cal.4th at pp. 395−396,

internal citations omitted.)

• “The trial court’s determination of whether an ambiguity exists is a question of

law, subject to independent review on appeal. The trial court’s resolution of an

ambiguity is also a question of law if no parol evidence is admitted or if the

parol evidence is not in conflict. However, where the parol evidence is in

conflict, the trial court’s resolution of that conflict is a question of fact and must

be upheld if supported by substantial evidence. Furthermore, ‘[w]hen two

equally plausible interpretations of the language of a contract may be made . . .

parol evidence is admissible to aid in interpreting the agreement, thereby

presenting a question of fact which precludes summary judgment if the evidence

is contradictory.’ ” (WYDA Associates v. Merner (1996) 42 Cal.App.4th 1702,

1710 [50 Cal.Rptr.2d 323].)

• “In interpreting a contract, the objective intent, as evidenced by the words of the

contract is controlling. We interpret the intent and scope of the agreement by

focusing on the usual and ordinary meaning of the language used and the

circumstances under which the agreement was made.” (Lloyd’s Underwriters v.

Craig & Rush, Inc. (1994) 26 Cal.App.4th 1194, 1197-1198 [32 Cal.Rptr.2d

144], internal citations omitted.)

• “Ordinarily, even in an integrated contract, extrinsic evidence can be admitted to

explain the meaning of the contractual language at issue, although it cannot be

used to contradict it or offer an inconsistent meaning. The language, in such a

case, must be ‘ “reasonably susceptible” ’ to the proposed meaning.” (Hot Rods,

LLC v. Northrop Grumman Systems Corp. (2015) 242 Cal.App.4th 1166,

1175-1176 [196 Cal.Rptr.3d 53].)

• “ ‘When there is no material conflict in the extrinsic evidence, the trial court

interprets the contract as a matter of law. [Citation.] This is true even when

conflicting inferences may be drawn from the undisputed extrinsic evidence

[citations] or that extrinsic evidence renders the contract terms susceptible to

more than one reasonable interpretation. [Citations.] If, however, there is a

conflict in the extrinsic evidence, the factual conflict is to be resolved by the

jury. [Citations.]’ ” (Brown v. Goldstein (2019) 34 Cal.App.5th 418, 433 [246

Cal.Rptr.3d 161].)

• “[I]t is indisputably the law that ‘when ambiguous terms in a memorandum are

disputed, extrinsic evidence is admissible to resolve the uncertainty.’ The

agreement must still provide the essential terms, and it is ‘clear that extrinsic

evidence cannot supply those required terms.’ ‘It can, however, be used to

explain essential terms that were understood by the parties but would otherwise

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be unintelligible to others.’ ” (Jacobs v. Locatelli (2017) 8 Cal.App.5th 317, 325

[213 Cal.Rptr.3d 514], original italics, internal citations omitted.)

Secondary Sources

1 Witkin, Summary of California Law (11th ed. 2017) Contracts, §§ 764-766

13 California Forms of Pleading and Practice, Ch. 140, Contracts, § 140.32

(Matthew Bender)

27 California Legal Forms, Ch. 75, Formation of Contracts and Standard

Contractual Provisions, § 75.15 (Matthew Bender)

2 Matthew Bender Practice Guide: California Contract Litigation, Ch. 21, Asserting

a Particular Construction of Contract, 21.04[2][b], 21.14[2]

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Page last reviewed May 2022