PREFATORY CONTRACT LANGUAGE CANNOT BE USED TO CREATE AN AMBIGUITY WITH OPERATIVE PROVISIONS

Posted on April 11, 2026April 11, 2026 by David Adelstein

Contract drafting and interpretation matters.

A case dealt with the potential conflict with prefatory language in an agreement compared with operative provisions in the agreement. The trial court held that the operative provisions control. I discussed this case here where the appellate court reversed based on the prefatory language.

But, through a motion for rehearing, the appellate court reconsidered its position and affirmed the trial court based on the operative provisions, mainly that the prefatory language cannot be used to create an ambiguity with operative provisions. Consider this explanation in affirming the trial court:

Because the trial court correctly found that the initial language in the contract was prefatory and could not be used to create an ambiguity in the remainder of the contract, we affirm the final judgment.

In interpreting a contract we consider the entire agreement. But the prefatory clauses at the start of a contract are “not an operative provision of an otherwise unambiguous agreement.” To the extent that there is any conflict between the prefatory language and the operative provisions of the contract, the operative provisions prevail.

The Orlando Lake Forest Venture case that the trial court cited in the final judgment is instructive. Similar to here, the issue there was whether the prefatory language in a contract restricted the broader language in the operative part. The specific issue in Orlando Lake Forest Venture was whether the mention of a shopping center in the prefatory language of the contract concerning development of a property restricted development to a shopping center, notwithstanding the lack of any restriction in the operative part of the contract. The court in Orlando Lake Forest Venture held, “Even assuming that Appellee’s proffered construction of the whereas clause manifests an intent to restrict the development of all of Appellant’s property to a shopping center, we conclude that the whereas clause is prefatory and not binding.” The court further stated, “The operative portion of the document is both comprehensive and unambiguous. Under these circumstances, the prefatory language should not be considered to vary the unambiguous terms of the operative portion of the document.”

Statutes are interpreted in the same manner as contracts. In construing statutes, the Florida Supreme Court has recognized the limitation of prefatory language, stating “It is well settled that such ‘prefatory language’ cannot expand or restrict the otherwise unambiguous language of a statute.” “Although prefatory language may aid a court to determine legislative intent when the operative terms of a provision of law are ambiguous, such language does not control interpretation of the operative terms of that provision.”

Likewise, “[t]he rules used in construing statutes are in general applicable in construing the provisions of a Constitution.” In construing the Second Amendment to the United States Constitution, the Supreme Court held, “That requirement of logical connection may cause a prefatory clause to resolve an ambiguity in the operative clause. . . . But apart from that clarifying function, a prefatory clause does not limit or expand the scope of the operative clause.”

City of Gainesville, Florida v. Parkwood Alachua Investments, Inc., 51 Fla.L.Weekly D707a (Fla. 1^st DCA 2026) (internal citations omitted).

The objective in drafting any contract is to use clear, unambiguous language. Remember, regardless of the prefatory language used to set the stage for the operative provisions, it is the operative provisions that drive the agreement.

Please contact David Adelstein at dadelstein@gmail.com or (954) 361-4720 if you have questions or would like more information regarding this article. You can follow David Adelstein on Twitter @DavidAdelstein1.

CONTRACT INTERPRETATION – DETERMINING WHAT THE CONTRACT REQUIRES

Posted on February 14, 2026February 14, 2026 by David Adelstein

A good ole dispute on contract interpretation in government contracting. Contract interpretation disputes happen all the time in every jurisdiction under the sun. Think about that. Now, what’s the best way to avoid a contract interpretation dispute? Naturally, invest in the contract language and fully understand the scope of work. Make all of this clear. But, of course, this isn’t foolproof meaning you could still be doing this and you could still find yourself in a contract interpretation dispute. Although, if you are doing this, and being proactive, the contract interpretation disputes should be minimal and more streamlined.

In Liberty Technical Services, LLC v. Department of Veterans Affairs, CBCA 8385, 2026 WL 407656 (CBCA 2026), the dispute centered on whether the government owed the contractor for certain, necessary equipment (largely controllers, but also tanks and pumps) not specified in the contract. The government countered that this should be a non-issue because the contractor always acknowledged it was responsible for furnishing the unspecified, necessary equipment, and the contractor did actually provide the equipment without direction from the government. Each party claimed the contract was unambiguous when construed in context.

To determine what the contract required, we must construe it to the extent possible according to its plain meaning, adopting the point of view of a reasonably intelligent person acquainted with the surrounding circumstances. We must read the document as a whole, giving reasonable meaning to all of its parts and avoiding, if we can, readings that result in useless, inexplicable, void, or superfluous terms. Generally, we may consider parol evidence and other extrinsic aids to interpretation only upon finding the contract ambiguous. However, as discussed below, the parties’ actions during performance in the form of written communication confirm the unambiguous, plain meaning. Evidence of trade custom or practice may inform our reading of a contract even absent an ambiguity but “only where a party makes a showing that it relied reasonably on [its] competing interpretation of the words when it entered into the contract.” Neither party has submitted sufficient evidence to establish a trade practice; rather, they have only alleged reliance on assumptions.

Liberty Technical Services, LLC, supra (internal citations omitted).

Based on the above principles of contract interpretation, the Civilian Board of Contract Appeals held that the contractor failed to prove it furnished equipment outside the scope of the contract. “When the contract is read as a whole, it supports VA’s position that the equipment for which [contractor] claims additional compensation is within the scope of the contract and additional work was not ordered by the VA.” Liberty Technical Services, LLC supra.

Taking it further, the Board noted that while the equipment was not specified on the equipment list, the equipment was necessary to perform the contract. “[A] reader of the contract with knowledge of the subject matter would have known that the equipment list did not include all of the equipment that the contractor would need.” Liberty Technical Services, LLC, supra.

And, on top of this, the contractor’s “actions during contract performance also do not support its later assertions that controllers were outside of the contract scope….Within eight days of starting performance of the contract, [the contractor] confirmed that it had purchased controllers and did not dispute at that time that controllers were included in the contract.” Liberty Technical Services, LLC, supra.

As they say, three strikes and you’re out. Here, there were at least three strikes against the contractor making its contract interpretation claim fail.

YOU NEED TO READ AND LEARN WHAT YOU SIGN!

Posted on January 17, 2026January 17, 2026 by David Adelstein

You need to read and learn what you sign!

The argument you did not read what you signed is a no-go. It’s not an argument you want to bank on in any way, shape, or form.

Here’s an example. In a recent case, a seller signed an Exclusive Listing Agreement with a real estate broker. The broker brought the seller full value (and eve a higher value) offers. The seller declined all offers and the broker sued the seller for lost commission. An argument the seller raised was that the offers she received were not qualifying offers because they didn’t comply with a document that only she signed regarding instruction to agents submitting an offer.

First, “[i]n Florida, ‘where a broker procures a customer willing, ready, and able to purchase property offered for sale according to the terms of the offer, and the transaction is defeated on account of some fault of the principal, the broker is entitled to his commission, although the transaction is not consummated.’” Carmona Realty Group, LLC v. Fernandez, 51 Fla.L.Weekly D112b (Fla. 3d DCA 2026) (citation omitted).

Second, the instructions to agents that only the seller signed was not part of the Exclusive Listing Agreement. The Exclusive Listing Agreement stated it was the entire agreement. The broker did not sign the instructions. And the Exclusive Listing Agreement did not reference or incorporate the instructions and the instructions did not reference or incorporate the Exclusive Listing Agreement. Carmona Realty Group, supra (“A mere reference to another document is not sufficient to incorporate that other document into a contract, particularly where the incorporating document makes no specific reference that it is ‘subject to’ the collateral document.”) (citation omitted).

Third, the seller acknowledged she didn’t read the Exclusive Listing Agreement. That was a no-no. “‘ A party has a duty to learn and know the contents of an agreement before signing it’, and ‘[a]ny inquiries . . . concerning the ramifications of [the contract] should have been made before signing.’” Carmona Realty Group, supra (citation omitted).

The outcome—the broker was entitled to its commission.

Read your agreement!

QUICK NOTE: INCLUDE KEY TIME RELATED FACTS IN CONTRACT TO AVOID AN AMBIGUITY

Posted on December 27, 2025December 27, 2025 by David Adelstein

When drafting or negotiating a contract, it is important to consider key time-related facts. In other words, if there are important provisions dealing with time, you don’t want to leave them undefined as that can create an ambiguity in the contract.

In a recent case dealing with an investment contract, discussed here, that’s exactly what happened. The contract allowed investors to exercise an option to return their equity in exchange for a refund of their investment but the contract didn’t contain an expiration date on when the option must be exercised. The investors tried to exercise the option two years later leading to a dispute as to whether that was a “reasonable time.” This is because the lack of clarity regarding this temporal fact led to a latent ambiguity meaning it was a question of fact as to whether the investors exercising the option two years later was reasonable under the circumstances.

Could this have been avoided? Yes, with an expiration date as to when the option could be exercised, which was a key fact related to time. But even without it, reasonableness does apply and reasonableness is typically a question of fact for others to decide a fact you would prefer, if you could do it over, to bring certainty to through the contract.

TIME TO NEGOTIATE LIMITATION ON REMEDIES AND DAMAGES IS ON THE FRONT END

Posted on December 26, 2025December 26, 2025 by David Adelstein

Remember, when it comes to contracts, the time to negotiate and enter into mutually agreed upon bargains is on the front end. And, if the contract is not negotiable, at least you know that and can make the business decision whether you want to accept the bargains and risks. If you don’t, well, you can walk away. Move onto another deal. If you do, then you make the business decision as to the bargains or risk transfers and accept them moving forward. One of those bargains and risks deals with a limitation on damages and remedies.

In a recent dispute dealing with the sale of an aircraft, there was a provision dealing with the buyer and seller’s remedies in the event of a breach. (Similar to a real estate transaction or other buyer-seller scenario.) “Contract section 10.4(a) stated that if the buyer defaulted, the seller’s “exclusive remedies” were to keep the aircraft and the buyer’s deposit. Section 10.4(b) stated that if the seller defaulted by “fail[ing] to deliver the [aircraft] in accordance with the terms of [the contract],” the buyer’s “sole remedies” were the seller’s reimbursement of the buyer’s inspection costs.” Sky Aviation Holdings, LLC v. Aviation Unlimited, 50 Fla.L.Weekly D2658c (Fla. 4^th DCA 2025). As you can see, there was a limitation on the seller’s damages.

In this case, the seller intentionally breached and notified the buyer that it will refund the deposit and pay the seller’s inspection fees. The seller accepted the limitation on its damages. The buyer didn’t like that and sued the seller arguing that Section 10.4(b) that limited its remedies if the seller breached should be deemed illusory and unenforceable. The trial court agreed and the case proceeded to trial on the buyer’s damages. On appeal, the appellate court reversed remanding the case back to the trial court to award the damages referenced in Section 10.4(b). The appellate court found it presented a reasonable limitation on damages the buyer may recover if the seller breached:

Parties to a contract may agree to limit their respective remedies, and those remedies need not be the same. The contractual provision, however, must be reasonable for a trial court to enforce it. To be reasonable, both parties must have genuine obligations.

***

Here, contract section 10.4 imposed real obligations on both the seller and the buyer.

Sky Aviation Holdings, supra (internal citations omitted).

QUICK NOTE: IF YOU WANT TO RECOVER ATTORNEY’S FEES IN A CONTRACTUAL DISPUTE, INCLUDE A PREVAILING PARTY ATTORNEY’S FEES PROVISION

Posted on November 16, 2025November 16, 2025 by David Adelstein

If you want the ability to recover attorney’s fees in the event of a contractual dispute, include a prevailing party attorney’s fees. Negotiate this point on the front end. Not doing so will hinder your ability to make the argument that you should be entitled to attorney’s fees due to a breach of the contract.

In a recent case, the prevailing party relied on an indemnification provision to create the argument for attorney’s fees even though the action had NOTHING to do with indemnity. This was shot down on appeal as a party can’t use an indemnification provision to create that attorney’s fees argument UNLESS the provision is expressly clear on this point.

This leads us back to the initial point: if attorney’s fees are important to you regarding a contractual dispute, include a clear prevailing party attorney’s provision. Express the intent in the contract.

AN “AGREEMENT TO AGREE” IS NOT A BINDING CONTRACT

Posted on November 13, 2025November 13, 2025 by David Adelstein

A driving issue in a recent dispute was whether a binding contract existed simply through the selection of a proposal in response to a solicitation. Or, was there nothing more than an “agreement to agree,” which does not create a binding contract. There is an important distinction between a binding contract an an “agreement to agree.”

A Community Redevelopment Agency (CRA) issued a Request for Proposals otherwise referred to as an RFP. The RFP specifically stated that the CRA and proposer will be contractually bound only if and when a written contract is executed between the parties. A proposer was notified that it was selected as the winning proposer however a written contract was never executed because the proposer was subsequently disqualified. The proposer filed a lawsuit claiming it was wrongfully disqualified and prevailed. The trial court found it was entitled to attorney’s fees pursuant to a contract that had been formed when the proposer’s proposal was originally accepted.

But was a contract actually formed? The appellate court said “NO!” holding that there was no binding contract simply because the proposer’s proposal was accepted. There was nothing more than an “agreement to agree” which never turned into a binding contract:

“The question of whether the parties intended to form a binding contract is determined by examining the language of the document in question and the surrounding circumstances.” “[I]f the parties prescribe terms to effectuate a binding agreement, such terms are controlling.” Thus, case law is clear that “[w]here the parties intend that there will be no binding contract until the negotiations are reduced to a formal writing, there is no contract until that time.”

The RFP specifically stated that “[t]he CRA and Proposer will be contractually bound only if and when a written contract between the parties is executed by the appropriately authorized officials of the CRA and Proposer.” Based on the plain language of the RFP, neither party was bound, nor was there a binding contract, until a written agreement was executed. Therefore, we find the trial court erred in awarding attorney’s fees based on a contract that was not written or agreed to. Because the parties intended to be bound only when the negotiations were reduced to a formal writing, and a formal writing was never executed, there was no contractual basis to support an award of fees ….Rather, the CRA’s selection of [the proposer] was “nothing more than an ‘agreement to agree,’ ” which is not enforceable.

The CRA’s selection of [the proposer] did not create a contract between the parties. “A request for proposal is used, for example, when the municipality is unable to define the scope of work required completely, or when responses may require subsequent negotiation. As a result, a contract is not typically formed until after the negotiation process.”

Community Redevelopment Agency of the City of West Palm Beach v. Vita Lounge, LLC, 50 Fla.L.Weekly D2448a (Fla. 4^th DCA 2025) (internal citations omitted).

THE PREFATORY WHEREFORE CLAUSES IN AGREEMENTS MATTER

Posted on October 12, 2025October 12, 2025 by David Adelstein

When drafting agreements, the language matters. This is because agreements are not intended to be construed in a vacuum. Sections of an agreement are not to be interpreted in isolation. Agreements are intended to be constructed in the context of the ENTIRE agreement. This is why there is tremendous value in the drafting of the agreement and the negotiation of the agreement. Neglecting this value can bring a large number of headaches, headaches that cost money and lead to undesirable consequences.

When drafting agreements, it has become routine to include prefatory clauses. Sometimes, these are known as the “Wherefore clauses,” that setup up the stage of the agreement before the numbered sections or paragraphs kick in. These Wherefore clauses show up in contracts and settlement agreements, and they matter.

In a recent case, City of Gainesville v. Parkwood Alachua Land Investments, Inc., 2025 WL 2792459 (Fla. 1^st DCA 2025), the issue on appeal was contract interpretation, and particularly the Wherefore clauses. Indeed, this is how the First Ditrict began its opinion:

This is a breach-of-contract case. When we are called to assess a trial court’s enforcement of a contract’s terms, as we are here, the supreme court tells us that we are “bound by the plain meaning of the contract’s text.” One or more provisions in a contract’s text, however, “cannot be viewed in isolation from the full textual context of which they are a part.” Rather, “proper interpretation requires consideration of ‘the entire text, in view of its structure and of the physical and logical relation of its many parts.’ ” This is so because “the goal of interpretation is to arrive at a fair reading of the text by determining the application of the text to given facts on the basis of how a reasonable reader, fully competent in the language, would have understood the text at the time it was issued.” “Context is a primary determinant of meaning.”

At issue here is whether initial paragraphs in the parties’ contract—paragraphs that do not define either party’s rights or obligations—can still be used to provide context governing the meaning of otherwise plain text appearing under the City of Gainesville’s (as the going concern known as Gainesville Regional Utilities, or “GRU”) specified obligation to pay rebate fees to the developer Parkwood Alachua Land Investments, Inc. (“Parkwood”), when certain conditions precedent occur. There was a bench trial, after which the judge applied the operative text literally, without considering the prefatory language for context, and rendered judgment against GRU for money due under the contract. GRU argues a different plain meaning of the text, basing its reading on the clear purpose of the whole contract, which is spelled out by introductory (or prefatory) language. Following the supreme court’s lead regarding “whole text,” or contextual, application of statutory and contractual provisions, we agree with GRU and reverse.

City of Gainesville, supra (internal citations omitted.)

As you can tell from the start of this opinion, the First District reversed because the trial court did not apply meaning or application to the Wherefore clauses. The contract itself, here, does not matter. What matters is that contract interpretation requires a review of the entire contract, not just sections in isolation. See City of Gainesville, supra (“Our objective ‘is to ascertain the meaning and intent of the parties as expressed in the language used.” As mentioned in the beginning, when we do so, we cannot read a textual provision in isolation-something the trial court erroneously did here.’) (citation omitted). Here, the trial court did not consider the Wherefore clauses, and this was a big no-no the First District:

In construing the [Agreement], the trial judge zeroed in on paragraphs nine and ten and expressly read them without considering the prefatory text or the circumstances surrounding the contract’s execution. The judge explained in her order that the prefatory text “may not be relied upon if they will cause ambiguity in an otherwise unambiguous contract.” This approach incorrectly treated the question of ambiguity as strictly binary—so making the decision whether to look at any other text in the contract at all wholly dependent on whether the text in question, by itself, is ambiguous in the first place. Construction canons are not to operate this way. “Viewed properly as rules of thumb or guides to interpretation, rather than as inflexible rules,” these canons “can aid the interpretive process from beginning to end,” so “[i]t would be a mistake to think that … interpreters [must] make a threshold determination of whether a term has a ‘plain’ or ‘clear’ meaning in isolation, without considering the statutory context and without the aid of whatever canons might shed light on the interpretive issues in dispute.”

City of Gainesville, supra (internal citations omitted).

Remember, the language in contracts matter, including language uses in the prefatory Wherefore clauses.

QUICK NOTE: CHOICE OF LAW PROVISIONS

Posted on August 9, 2025August 9, 2025 by David Adelstein

It is common for construction contracts to include a choice-of-law provision or language. This is language that says the contract is to governed under the laws of the state of Florida (by way of example). Pick any jurisdiction. There may be other language in the provision, but the gist is that if there is a dispute arising under the agreement, the laws of the state designated in the choice-of-law provision will apply.

For example, you can have an agreement in Florida with a vendor but that agreement includes a choice-of-law provision that says the state of Virginia applies. This is because the vendor may be based in Virginia and the agreement was based on Virginia law.

However, a choice-of-law provision can be waived if it is not timely raised in a lawsuit. So, if you are in a dispute in Florida under an agreement that says Virginia law applies, the application of Virginia law can be waived if it is not raised. This is an important consideration because the designated state may contain more favorable legal principles on a given issue. This was the circumstance discussed here where the Virginia choice-of-law provision was waived because it was not timely raised. Had it been timely raised, it would have benefited a party on an issue dealing with attorney’s fees which is treated differently in Florida.

A CONTRACT IS A CONTRACT: RELEASES AND CHANGE ORDERS / BILATERAL MODIFICATIONS ARE CONSTRUED AS CONTRACTS

Posted on April 6, 2025April 6, 2025 by David Adelstein

A contract is a contract. It should say what it means and means what it says. A release is construed like a contract. A change order or bilateral modification is construed like a contract. The decision out of the United States Court of Federal Claims, B.L. Harbert International, LLC v. US, 2025 WL 914388 (Fed.Cl. 2025), serves as a case on point.

In this case, the contractor had a claim related to a bilateral modification (i.e., change order #1) on a federal project which included a two-month extension of time to complete the contractor’s work. The modification stated the contractor and the contractor’s subcontractors waived the right to seek compensation for any other delays relating to the work. “When a contractor signs a general release, it is barred from seeking damages for the events connected to and contemplated by the release.” B.L. Harbert International, supra, at *4. Thus, the contractor’s claims related to this modification were waived.

The contractor also had claims related to two other bilateral modifications (i.e., change orders #2 and #3). The modification #3 left open any time extension due to the changed work and costs associated with the time extension because it was uncertain whether such work would result in a delay. However, the work did NOT cause a delay. The contractor accelerated its subcontractor and had the work completed ahead of schedule. The contractor claimed it was entitled to the additional costs associated with the acceleration. But the acceleration is NOT a time extension or delay. “[The contractor] could have negotiated with the Corps to cover acceleration costs that would prevent any further extensions of time, but it is too late to make that change to the contract after the fact.” B.L. Harbert, supra, at #4. In other words, modification #3 resolved the contractor’s costs for additional work other than a time extension and costs associated with a time extension. But a time extension was never needed. Thus, the contractor waived any costs for acceleration.

The contractor made another argument to counter the specific language in the modifications. It argued mutual mistake.

The contractor argued that the parties understood that the modifications did not cover the contractor’s additional costs as reflected in letters the contractor sent the government prior to the modifications. Therefore, the contractor claimed there was no meeting of the minds if the government’s position is different.

Under universal contract interpretation and each executed modification is a contract, “when contract provisions are clear and unambiguous, they must be given their plain and ordinary meaning.” B.L. Harbert, supra, at *5 (internal quotation and citated omitted). The modifications were clear and unambiguous.

Next, the contractor never presented its request for contract reformation due to mutual mistake to the government’s contracting officer, and the court can only review claims presented and certified to the contracting officer under the Contract Disputes Act. Regardless, the contractor couldn’t satisfy the requirements of mutual mistake. “To show a mutual mistake, [the contractor] must meet four elements by clear and convincing evidence, including demonstrating that ‘the parties to the contract were mistaken in their belief regarding a fact … [and] the contract did not put the risk of the mistake on the party seeking reformation.’” B.L. Harbert International, LLC, supra, at *5 (citation omitted). The contractor had to show that “the parties shared a mutual mistake,” which it could not factually demonstrate. See id.