Texas is a work at-will state. An employer can modify an at will relationship with an employee by entering into an employment contract. The published cases involving employment law and contracts usually involves the termination provision in the employment contract. Texas courts construe unambiguous contracts as a matter of law.
What’s an unambiguous contract?
According to Webster Dictionary, unambiguous means clear and precise. A contract is not ambiguous if it can only have one meaning or interpretation. A good employment contract will have clear terms that do not have a different interpretation. A court may consider the parties’ interpretation of the contract and admit extrinsic evidence (other documents and testimony about the meaning of language in the contract) to determine the true meaning of its terms only after the court has determined that the contract is ambiguous. David J. Sacks, P.C. v. Haden, 266 S.W.3d 447, 450-451 (Tex. 2008) (quoting Nat’l Union Fire Ins. Co. of Pittsburgh, Penn.v. CBI Indus., Inc., 907 S. W.2d 517, 520 (Tex. 1995) (percuriam)).
What’s the Parol Evidence Rule?
The Parol-Evidence Rule prohibits consideration by the court of extrinsic evidence to contradict, vary, or add to the terms of an unambiguous written agreement, absent evidence of fraud, accident or mistake. In layman’s term, you cannot introduce evidence to change the terms of the unambiguous contract. The parole evidence rule only applies to contractual writings evidencing the creation, modification, termination, or securing of a particular right or obligation.
What are the exceptions to the Parol Evidence Rule?
If there was fraud or mistake in making the agreement, then the parole evidence rule would permit the parties in a lawsuit to introduce extrinsic evidence to vary, add to or contradict the terms of the written agreement. If the contract is determined to be ambiguous, you can introduce extrinsic evidence to establish the parties’ intent.
Who determines if a contract is ambiguous?
The court does. Whether a contract is ambiguous is a question of law, for the court to decide. The court can decide whether the contract is ambiguous or not, on its own motion. Whether the contract provision is ambiguous, is determined by an examination of the contract as a whole, determined in light of the circumstances when the parties entered into the contract. JM Davidson v Webster 128 S.W.3d 223 (Tex. 2003)
