California Civil Jury Instructions (CACI) (2017)

318. Interpretation—Construction by Conduct

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318.Interpretation—Construction by Conduct
In deciding what the words in a contract meant to the parties, you may
consider how the parties acted after the contract was created but before
any disagreement between the parties arose.
New September 2003; Revised December 2014
Directions for Use
This instruction may be given with CACI No. 314, Interpretation—Disputed Words.
See the Directions for Use and Sources and Authority to that instruction for
discussion of when contract interpretation may be a proper jury role.
Sources and Authority
• “In construing contract terms, the construction given the contract by the acts
and conduct of the parties with knowledge of its terms, and before any
controversy arises as to its meaning, is relevant on the issue of the parties’
intent.” (Southern Pacific Transportation Co. v. Santa Fe Pacific Pipelines, Inc.
(1999) 74 Cal.App.4th 1232, 1242 [88 Cal.Rptr.2d 777].)
• “This rule of practical construction is predicated on the common sense concept
that ‘actions speak louder than words.’ Words are frequently but an imperfect
medium to convey thought and intention. When the parties to a contract
perform under it and demonstrate by their conduct that they knew what they
were talking about the courts should enforce that intent.” (Crestview Cemetery
Assn. v. Dieden (1960) 54 Cal.2d 744, 754 [8 Cal.Rptr. 427, 356 P.2d 171].)
• “The conduct of the parties after execution of the contract and before any
controversy has arisen as to its effect affords the most reliable evidence of the
parties’ intentions.” (Kennecott Corp. v. Union Oil Co. of California (1987) 196
Cal.App.3d 1179, 1189 [242 Cal.Rptr. 403].)
• “[T]his rule is not limited to the joint conduct of the parties in the course of
performance of the contract. As stated in Corbin on Contracts, ‘The practical
interpretation of the contract by one party, evidenced by his words or acts, can
be used against him on behalf of the other party, even though that other party
had no knowledge of those words or acts when they occurred and did not
concur in them. In the litigation that has ensued, one who is maintaining the
same interpretation that is evidenced by the other party’s earlier words, and
acts, can introduce them to support his contention.’ We emphasize the conduct
of one party to the contract is by no means conclusive evidence as to the
meaning of the contract. It is relevant, however, to show the contract is
reasonably susceptible to the meaning evidenced by that party’s conduct.”
(Southern California Edison Co. v. Superior Court (1995) 37 Cal.App.4th 839,
851 [44 Cal.Rptr.2d 227], internal citations omitted.)
Secondary Sources
1 Witkin, Summary of California Law (10th ed. 2005) Contracts, § 749
13 California Forms of Pleading and Practice, Ch. 140, Contracts, § 140.32
(Matthew Bender)
1 Matthew Bender Practice Guide: California Contract Litigation, Ch. 13, Attacking
or Defending Existence of Contract—Absence of Essential Element, 13.51