Monday, July 23, 2012


Judge Monroe Freeman, one of the longest serving members of the Armed Services Board of Contract Appeals (ASBCA), recently has interpreted the plain meaning of contract language to find no ambiguity and he concludes the government's interpretation is "not within the zone of reasonableness."  As a result, he also concludes that the government's request for discovery of extrinsic evidence on the meaning of the language is irrelevant and not permitted.

The language in question stated:
[T]he delivered quantity of fuel shall be determined on the basis of temperature compensating meters on the receiving system -- (or if the receiving system meters are inoperative) on the basis of (i) Calibrated meter on the conveyance; or (ii) Gauging the delivery conveyance . . . or (iii) . . . the net quantity determined at the loading point by a calibrated loading rack meter or calibrated scales . . . .
The government argued the phrase "or if the receiving system meters are inoperative: means that all meters on the receiving systems, whether or not they are temperature compensating meters, must be inoperative before the specified alternatives apply.  The government cited a declaration from the contracting officer stating the government's intention to use meters, not weight scales.

Judge Freeman disagrees.  He says "[t]he cited phrase appears in the same sentence and immediately following the specification of 'temperature compensating meters on the receiving system.'"  Thus, the words "receiving system meters" refers to the immediately preceding language.  The government's interpretation, says the ASBCA "is not within the zone of reasonableness and we find no ambiguity in the clause."

No ambiguity.  And when there is no ambiguity, extrinsic evidence of the contracting officer's unilateral intent cannot be used to vary the unambiguous terms of the written contract.

Once again, the first rule of contract interpretation is to determine the plain meaning of the contract language, reading the contract as a whole and giving meaning and harmony to all its parts.  Ambiguity exists only if there is more than one reasonable interpretation.

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