Breach of contract; Void or voidable; Lewis v Farmers Ins Exch; Whether the contract was unambiguous; “Null and void”

Concluding that the trial court erred in granting defendant summary disposition of plaintiff’s breach-of-contract claim, the court reversed and remanded. In 1/21, the parties entered into a contract for defendant-May Builders (whose sole proprietor was May) “to perform renovations, and build a bedroom addition, for a house plaintiff owned.” Plaintiff alleged “that defendant failed to properly hire, manage, and supervise subcontractors, to the detriment of the construction project.” On appeal, plaintiff argued that the trial court erred “by determining that the contract was unambiguous and that ¶ 15 [of the agreement] left it unenforceable except for defendant’s right to be paid for work performed.” The court agreed. Plaintiff asserted “the most logical interpretation of ¶ 15 is that the contract would be cancelled, going forward, if May died or became incapacitated; however, plaintiff also argues that, if that interpretation is not clear from the wording of the contract, then at the very least the agreement is ambiguous.” Plaintiff further argued “the parties did not intend for the term ‘null and void’ in ¶ 15 to carry the legal meaning that the contract would be rendered void ab initio upon May’s death. Rather, according to plaintiff, the parties intended for ¶ 15 to cancel the contract prospectively from the time of May’s death, without extinguishing the existing rights and liabilities of the parties as they existed until then.” Defendant argued that “¶ 15 of the agreement operated to void and nullify the agreements between the parties upon the condition subsequent, which was the death of May.” The court held that pursuant to Lewis, “because a contrary meaning appears in the contract, we must presume that the term ‘null and void’ was not intended to be given its technical legal meaning, and instead was meant to be synonymous with ‘cancel.’ Interpreting the phrase ‘null and void’ as having its technical legal meaning would create an ambiguity in the contract because it would irreconcilably conflict with the phrase, ‘with the exception of payment for work completed.’” The court concluded that if “the contract is void, then it does not exist at law, meaning it has no legal force or binding effect.” Thus, the court found that “the phrase ‘null and void’ could not be read in concert with the phrase, ‘with the exception of payment for work completed,’ because plaintiff could not be contractually obligated to pay defendant for work completed if the contract did not exist. But ‘courts cannot simply ignore portions of a contract in order to avoid a finding of ambiguity or in order to declare an ambiguity. Instead, contracts must be construed so as to give effect to every word or phrase as far as practicable.’” The court held that when the contract was “read as a whole, reading the phrase ‘null and void’ to mean ‘cancel’ harmonizes it with the phrase ‘with the exception of payment for work completed,’ which was clearly the intention of the drafters based upon the rest of the document.”