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Schweizer v. Stepan Chemical Company

A-2099-01T5 (N.J. Super. App. Div. 2003) (Unpublished)

CONTRACTS; INTERPRETATION—While determining the construction of a contract is a matter of law, when a contract is ambiguous or parol evidence is needed to understand the agreement, it is up to a jury to determine what agreement was reached.

A contractor signed a construction contract to perform demolition work at a chemical company. The contract contained an indemnification provision in which the contractor was to indemnify the chemical company for any injuries or damages that were not caused solely by the negligence of the chemical company or its employees. An officer of the contractor sent two letters to the chemical company, one with the signed contract and the other a week later. In the second letter, the contractor attempted to clarify the indemnity provision and limit its liability in cases where the chemical company was negligent.

One of the contractor’s employees working at the chemical company was injured in a fire at the job site. At trial, the parties stipulated that the injuries were not caused solely by the chemical company’s negligence. The issue was whether or not the contractor accepted the contract with the indemnity provision. The contractor argued that it was up to the court, not a jury, to determine if the indemnity provisions were part of the agreement. The trial judge sent the matter to the jury which determined that contractor accepted the contract with the indemnity provision. On appeal, the Appellate Division affirmed the trial judge’s decision to send the question to the jury. It found that, while a court typically determines the construction of a contract as a matter of law, when the contract is ambiguous, or parol evidence is needed to understand the agreement, it is up to a jury to determine what agreement was reached. In this case it was not clear if the contractor and chemical company agreed to a contract with no indemnity provision, the indemnity provision in the contract, or a less onerous indemnity provision consistent with the correspondence sent by the contractor.


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