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AgreementsClear and Unambiguous Agreements Avoid Future Disputes

May 15, 2007

It seems to be just common that when negotiating any type of marital agreement, it is important to make sure that your every intention is clearly spelled out, even if the intent seems obvious to you..  Such is the lesson of recently decided case of Genovese v Axel.

In Genovese:

[T]he parties executed a prenuptial agreement dated April 17, 2000, whereby they agreed to waive their respective rights of election pursuant to EPTL 5-1.1-A. Following the waiver provision, the parties agreed, in clause 1(ii), that “[n]otwithstanding anything to the contrary” they would each “execute their respective Last Will & Testament[s] leaving a minimum of 33 1/3% of their gross estate to each other.”

Needless to say, a few years later the parties divorced. Following the divorce, the ex-wife sought to have her husband name her as a one third beneficiary of his estate.

It seems obvious that it was the the couple’s original intent  to make reciprocal obligation to name the other as a beneficiary of his/her estate conditioned upon the continuation of the marriage.  Nothing in the opinion indicates that the parties wished to bind  their post divorce estates.  Unfortunately, , the parties had to spend thousands in legal fees and go as far as the Appellate Division to reach this result.

Where an agreement is clear and unambiguous on its face, as here, the intent of the parties is gleaned from the four corners of the writing as a whole with a practical interpretation of the language employed so that the parties’ reasonable expectations are met (see W.W.W. Assoc. v Giancontieri, 77 NY2d 157, 162; Rainbow v Swisher, 72 NY2d 106, 109; Sunrise Mall Assoc. v Import Alley of Sunrise Mall, 211 AD2d 711). In examining the agreement, the court should consider the relation of the parties and circumstances under which it was executed. “Particular words should be considered, not as if isolated from the context, but in the light of the obligation as a whole and the intention of the parties as manifested thereby” (Kass v Kass, 91 NY2d 554, 566 quoting Atwater & Co. v Panama R.R. Co., 246 NY 519, 524).

The one-third provision appears under the heading “release of rights,” in which the parties employed language such as “surviving spouse” and “deceased spouse,” which evidences their intent that the parties remain married in order to receive a one-third disposition under each other’s will. The plaintiff contends that the use of the phrase “notwithstanding anything to the contrary” demonstrates that the parties intended the one-third provision to remain in effect regardless of their marital status. We disagree. That language modifies the previous provision, in which the parties waived the spousal right of election. The plaintiff’s interpretation would require this court, under the guise of interpretation, to imply a provision that the parties chose to omit (see Karmin v Karmin, 19 AD3d 458, 459), namely that the obligation contained in clause 1(ii) would extend to one who was no longer a spouse.

The morale of the story, when drafting an agreement, make sure that the agreement is as clear as possible.  Do not trust anything to extrinsic or common sense interpretation . If there is a dispute over the agreement, rest assured, the person with whom you have a dispute will have a different recollection of the basis of the bargain.

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