Wednesday, April 9, 2014

“The Sacred Cow of Equity and Strict Compliance in Letter of Credit Law: Recent Trends and Projections”, an article by VLF’s Managing Attorney Charles M.R. Vethan published in 1994 was recently cited by the Malaysian Bar Association (Bar Malaysia) in Kuala Lumpur. Read the article here:

ARTICLE: Principle Of Strict Compliance In Letter Of Credit (LC): Towards A Proper Standard Of Compliance

By Dr Rosmawani Che Hashim*

ABSTRACT

Principle of strict compliance is significant to sustain the smooth flow of LC procedure. LC expedites payment to a seller as well as guarantees delivery of goods that fulfil contract description to a buyer. However, the issue of standard of compliance causes delays in payment and vitiates the credibility of LC as a method of payment in international trade. Once discrepancies exist in seller’s documents, the documents will be considered as non-compliance and all undertakings are suspended. Consequently, a seller will not receive payment and a buyer will not be able to claim the goods at port of delivery. This paper addresses issues relating to the required standard of compliance from perspective of the UCP 600 and ISBP.

INTRODUCTION

Letter of credit (LC) is a payment mechanism, used to facilitate trade in international sales. One of the fundamental principles governing the LC operation is the principle of strict compliance. The principle requires the seller to present the necessary documents in accordance with LC requirements; in order to claim payment for the goods sold. The principle of strict compliance is defined as the legal principle that entitles the bank to reject documents which did not strictly comply with the terms of LC. [1] The issue of strict compliance comes into the picture during the process of checking documents in LC transactions. The bank is the party responsible in determining whether or not the presentation complies with LC requirements based on the Uniform Custom and Practice for Documentary Credit (UCP 600) and ISBP. The former is the primary rules which govern LC transactions whereas the latter serves as guidelines for the standard interpretation within which the bank must exercise its reasonable judgment in ascertaining the documentary compliance.

The principle of strict compliance aims to protect the buyer who has neither the opportunity to examine the physical goods nor to supervise the process of loading the goods in the seller’s country due to geographical distance. Therefore, the documents are the only security for the buyer. The documents prove that the goods have been properly delivered in accordance with the description in the sale contract.

At the same time, the principle of strict compliance also benefits the seller by providing fast payment. The seller does not have to wait until the goods shipped safely reach the buyer before claiming payment. The seller can claim payment for the goods sold by presenting to the bank the documents required by the buyer once the goods have been shipped to the buyer. Thus, it is essential that the seller’s documents contain a true description of the goods; otherwise the buyer has a right to instruct the bank to reject the documents, which are deemed to be non-compliant.

Apart from the buyer and seller, the bank also benefits from the application of the principle of strict compliance in LC. The bank will be protected against any legal repercussion as long as the payment to the seller was made upon strict compliance of seller’s documents. This is irrespective of the condition of the goods received by the buyer. Since banks usually have limited expertise in goods or industries, they are not expected to know every aspect of commercial terminology in trade, for instance, “coromandel groundnuts” is another trade name for “machineshelled groundnuts kernel.”[2] In most cases, the bank does not even know what kinds of goods are transacted between the seller and the buyer.[3] Hence, even if there is any problem with the goods delivered, the bank will not be held responsible for releasing the payment to the seller as long as the documents are in order. Bank will not be required to ensure that the goods delivered to the buyer meet the specifications in the sale contract.

STANDARD OF COMPLIANCE: A CONFLICT

The well-noted problem regarding the application of the principle of strict compliance in LC is the problem of determining the standard of compliance. Surprisingly, despite being the fundamental principle underlying LC transactions, the requirement for strict compliance is not mentioned in any versions of the UCP.[4] In other words, UCP, being general in nature, does not provide guidelines as to what are the degrees or parameters of discrepancies which would justify the bank to withhold payment on the ground of documentary non-compliance. Until the introduction of the UCP 600, none of the previous revisions of the UCP (including the UCP 1993) provided remedy to the strict compliance issue.[5]

Since there were no standard parameters set by the previous revisions of the UCP, the task of determining the standard of compliance required in documents was left to the courts to decide. Evidently, this loophole has contributed towards conflicts of judgment in case laws as well as uncertainty in banking practices. Over the years, judges and LC experts struggled to come up with a formula to determine the standard of compliance in LC, resulting in diverse opinions and views being formulated. In general, the standard of compliance is divided into literal and substantial compliance standards.[6] The literal compliant standard demands a high standard of compliance. The documents must be in strict compliance with the LC requirements. In other words, it must be the ‘mirror image’ of the LC. This standard suggests that minor mistakes such as typographical errors can be considered as a discrepancy which allows the bank to reject the documents. It is essential in order to protect the banks’ scope of undertaking which is confined to the face of documents only. It also protects the banks from customers’ complaints. Last but not least, it serves the objectives of certainty and reliability of the banker’s credit and guarantees sureness of payment to the beneficiary.

The substantial compliance standard suggests that the presentation of documents which are substantially in compliance with the credit can be accepted as a good presentation. Accordingly, any trivial or non significant discrepancies can be waived. The rationale behind the substantial compliance standard is to promote equity to the beneficiary. It also protects the relationship between bankers and their high valued customer from being affected by minor discrepancies; which results in documentary non-compliance. However, despite its slightly relaxed nature of compliance parameters compared to the literal compliant standard; the substantial compliance standard is not easily practiced. The latter requires skills and in-depth knowledge in order to determine whether to accept or reject the documents tendered. Thus, to certain extent, substantial compliance standard demands the involvement of the bank’s senior or experienced officers to make decisions.[7] Moreover, there are opinions; which claim that substantial standard is inappropriate, controversial and triggers disputes.[8]

However, there are however some LC experts who do not favour the literal and substantial compliance standard classification. They opined that there is no principle of “strict” compliance mentioned in the UCP. The phrase is merely a fiction invented by lawyers drawn from contract law. Moreover, they also alleged that “strict” compliance is not a principle of sound banking.[9] The idea signifies that compliance should be determined based on the documents as a whole with reference to their roles in LC transactions. Regardless of the standard applied, the examination of documents which involves humans checking should not be carried out based on scientific method but it must be realistic. In addition, the question of standard of compliance is subjective and it depends on each individual approach. Some bankers may view the non-compliance on one document as discrepancy while others may look at the content of the requirement and construe it as complying with the LC requirement.

STANDARD OF COMPLIANCE AND THE UCP 600

The current UCP 600 is the result of the ICC Committee’s effort to solve problems relating to strict compliance and documentary discrepancies which arise from the application of the UCP 500. Among the points being painstakingly dissected during the UCP Drafting Group meeting are related to the doctrine of strict compliance and the mechanism to reduce the percentage of rejected documents due to discrepancies.[10] Having realised the high rate of discrepancies found in the seller’s documents, the ICC working groups came up with the new UCP 600. The new version aims to reduce the strict requirements imposed by the UCP 500 on documents. Various views and comments on the current rules in the UCP 600 portray it as more customer-friendly and an easier reference compared to the earlier UCP version.[11]

The UCP 600 still maintains its general nature. It does not highlight objectively the criterion that constitutes compliance or otherwise. The current UCP through the provision of Article 16(b) seems to be the mechanism to pass over the bulk of documents to the trading parties ie, the seller and the buyer to finally determine whether or not to accept the discrepant documents. Yet, the word “may” of Article 16 (b) implies that the bank retains a discretionary authority whether to refer the notified discrepancies to the applicant or not.[12]

Despite the generality of the rules, UCP 600 contains provisos which clarify the previous provisions of documentary compliance. It also introduces new articles including those which provide definitions of presentation and complying presentation. As an example, complying presentation is defined as:

a presentation that is in accordance with the terms and conditions of the credit, the applicable provisions of the UCP rules and international standard.[13]

The above clarification removes the existing perceptions of compliant documents.[14] It states that the compliance of documents is not only determined by LC requirements and the rules of the UCP rules; it must also be guided by the International Standard Banking Practice. (ISBP).

The doctrine of strict compliance has been relaxed by the provisions introduced by the UCP 600.[15] It is stated in Article 14(d), UCP 600:

Data in document, when read in context with the credit, the document itself and international standard banking practice, need not be identical to, but must not conflict with, data in that document, any other stipulated documents or credit.”

The above provision eliminates the narrow provision of Article 13(a) of the UCP 500, which stated that documents which are “inconsistent with one another,” will be treated as non-compliant. The introduction of the new provision by the UCP 600 reduces the complexity presented by the strict compliance principle. It signifies that as long as the contents of the documents are not contrary to the LC, the bank will accept documents as in compliance. The requirement that the content of the seller’s documents “need not be identical to, but must not conflict” eliminates conflicts between different documents, which is the most frequent ground for the dishonour of documents presented under commercial LCs. Likewise, the application of this current rule has lessened the seller’s burden relating to documentary compliance. In other words, leeway accorded by the UCP 600 will be able to minimise the volume of discrepancies in documents presented by the seller as the requirement for compliance becomes simpler and easier to perform. It gives the bankers a greater degree of flexibility that should result in fewer discrepancies and rejections.[16] This provision however does not objectively state the criteria of compliance. While it undoubtedly implies a wider compliance approach, it however opens up room for potential new disputes; for example, to what extent the data is not in conflict with each other.

Another provision in the UCP 600 that comforts the seller is Article 14(e) which allows the goods in all documents (other than the commercial invoice) to be described in general and not be in conflict with LC requirements.[17] Furthermore, Article 14(j) provides that addresses of the beneficiary and applicant need not be the same as those in the credit, provided that they are in the same respective country. Thus, in the present position under the UCP 600, such non-compliance is no longer considered as discrepancy.

However, notwithstanding the tolerance offered by the UCP 600, it does not promise absolute leniency for the seller. The requirement of strict compliance still remains in Article 18(c) relating to the description of the goods in a commercial invoice. It states:

The description of the goods, services or performance in a commercial invoice must correspond with that appearing in the credit.”

The above provision expressly maintains the requirement of strict compliance in commercial invoice. Generally, the leniency offered by the UCP 600 to other LC documents[18] and addresses[19] are not extended to commercial invoice since the phrase “must correspond” with the requirement of LC in Article 37(c) of the previous UCP 500 is still maintained. However, by virtue of Article 14(d) above, the phrase “must correspond” should be construed within the meaning of this provision, which offers less rigidity in documentary compliance.

Furthermore, the UCP 600 offers some leniencies and protections for bankers. The emergence of Article 16 of the UCP 600 has eased the tension suffered by banks in dealing with discrepant documents. The rule allows the bank to practice ‘conditional refusal.’ This procedure makes the bank’s duty to justify acceptance or refusal of the documents much easier.[20] The bank may refuse to honor the draft under an LC if the presentation of the documents is not compliant.[21] In doing so, the bank must notify the presenter by giving a notice of refusal. [22] The notice must be given by telecommunication or by any expeditious means no later than the close of the fifth banking day following the day of presentation. [23]The notice must state that:

(i) the bank has refused to honour

(ii) list down each discrepancy

(iii)       (a) the bank is holding the documents pending further instruction from
     the presenter;

or,

(b) the issuing bank has requested a waiver of the discrepancies from  
     the applicant and is holding the documents until it receives such a
     waiver and accepts it, or receives further instructions from the
     presenter prior to agreeing to accept a waiver,
or

(c) the bank is returning the documents;
or

(d) the bank is acting in accordance with instructions previously
     received from the presenter.[24]

Failure by the bank to state clearly in the notice its refusal and rejection of the presentation of documents may preclude the bank from exercising its right of rejection. Merely sending a notice from the bank to acknowledge the discrepancies is not sufficient to constitute rejection. [25] In addition, the UCP 600 provides disclaimers for the banks to protect them from any difficulties arising out of the documents and performance of LC transactions.[26]

Furthermore, this Article bestows mercy on the seller since he would have known whether or not the documents are discrepant and allows him to provide prior instructions to the issuing bank, and the buyer would have also been contacted before the documents arrived.[27]

STANDARD OF COMPLIANCE AND THE ISBP

Apart from the UCP, another important reference that guides the banks in determining the international standard to be used in checking documents is the ISBP.[28] The latest version is the ISBP 2013, ICC Publication No. 745. Thus far, the ISBP, which aims to reduce the number of documents rejected by banks, has already played a significant role in reducing international discrepancies. It contains a list of general principles relating to the standard practices for determining documentary compliance. The ISBP is referred to in cases whereby the rules of the UCP need clarification.[29] The ISBP allows the transaction to continue in a normal way without hindering it. This has definitely contributed a lot in reducing discrepancies since the ISBP requires substantial compliance instead of strict literal compliance. It is basically done by examining the documents and neglecting minor non-compliance to be regarded as discrepancies.

However, it should be noted that the requirement that a presentation must be in accordance to the ISBP is not mandatory. Banks may only adopt the ISBP for clarification. They cannot rely only on the ISBP in deciding whether to reject or accept the presentation as it must be solely based on the UCP alone.

CONCLUSION

The application of the principle of strict compliance may put the buyer in difficulty if the seller’s documents are rejected for non-compliance. The buyer in such a case needs to wait for the seller to rectify the rejected documents since the buyer has to possess the documents to take delivery of the goods. This delay may affect the buyer’s business schedule and causes him to lose his business profit. Even though the buyer has the right to waive the discrepancies, in practice, the final say in most cases is still with the bank.

Obviously, the hindrance caused by the discrepancies of documents produces negative impact on the LC as a means of payment. This phenomenon should not be ignored as it affects the LC’s integrity as a recognised means of settlement in international trade. Once a document is found to contain discrepancies, the whole process is likely to be deferred. Such discrepancies trigger unnecessary hiccups, which may be temporary or permanent in the flow of LC procedures. In most cases, noncompliance disputes will open a leeway to court proceedings. The delays may definitely be prolonged as the litigation continues. In worse situations, delay of payment may end up causing possible loss of future trade.

The existence of the latest UCP 600 is claimed to provide leniency and a higher degree of compromise to the strict compliance principle. Wider strict compliance as suggested by the UCP 600 does not mean that the data content in any documents could go ‘unmatched’. Generally, it only widens the scope of compliance where data in any document may differ expressly with one another but should not contradict each other. This is in line with the different purposes and functions of each document where the express wording contained in any one document may slightly differ with the expressed wording in other documents. This new approach of compliance is seen to ensure smoother payment under the LC rather than looking for discrepancies and rejecting such discrepant documents during the process of document examination.

In short, the current UCP 600 limits the depth of examination of documents by banks and provides leniency in resolving issues on discrepant documents where the trading parties, namely the buyer and the seller, equally have some binding say on how the discrepant documents should be dealt with. Generally, as far as ‘compliance’ is concerned, the UCP 600 can be said to encourage fair and equitable trade. Nevertheless, it is alleged that the adoption does not totally eradicate issues of compliance of documents in LC since the examination process of documents involves human intervention.[30] Therefore, discrepancies cannot be avoided completely no matter how well the UCP is written.’[31]

*Senior Lecturer, Department of Policy and Business Strategy, Faculty of Business
and Accountancy, University of Malaya.

This article first appeared in CLJ [2013] 1 LNS(A)lix and is reproduced with permission from the Author.

Endnotes:
[1] Alan Davidson, “Commercial Laws in Conflict - An Application of the Autonomy Principle in Letters of Credit,” 6 Int'l. Trade & Bus. L. Ann. 65 (2001).
[2] See, J.H. Rayner Co Ltd v. Hambro’s Bank Ltd [1943] K.B. 37.
[3] See, Power Cuber International Ltd v. National Bank of Kuwait (1981) 1 WLR 1233, per Lord Denning MR, at 1241.
[4] Ravi Mehta, Does UCP 600 Soften or End the Doctrine for Strict Compliance? LC Views, Newsletter No. 101, March 2007.
[5] Charles M.R. Vethan, “The Sacred Cow of Equity and Strict Compliance in Letter of Credit Law: Recent Trends and Projections,” (1994), 6-SPG Int’l Legal Persp. 45, at 48.
[6] See, TomPifer, “Note and Comment: The ICC Publication of International Standard Banking Practice (ISBP) and the Probable Effect on United States,” (2006) 12 Tex, Wesleyan L. Rev. 631, at 637-640; Steven C. Rattner, “Letters of Credit: A Return to the Historical Documentary Compliance Standard,” (1984-1985) 46 U. Pitt. L. Rev. 457, Boris Kozolchyk,“Strict Compliance and the Reasonable Document Checker,” (1990-1991) 56 Brook. L. Rev. 45 Vol. 56, Issue 1.
[7] Ravi Mehta, Does UCP 600 Soften or End the Doctrine for Strict Compliance? LC
Views, Newsletter No. 101, March 2007, viewed on 18April 2009.
[8] See, Mohamed Ibrahim M Adam, The Problem Relating to The Interpretation of
Strict Compliance Rule In Letters of Credits Practice, May 13, 2006, viewed 10 June 2012.
[9] Byrne, James E, School of Law, University of George Mason, USA (Interviewed by author, Kuala Lumpur, 21 July 2009).
[10] See, Charles Debattista, “The New UCP 600 - Changes to the Tender of the Seller’s Shipping Documents under Letters of Credit,” (2007) J.B.L., JUN, 329-354, at 2.
[11] Janet Ulp, “The UCP 600: Documentary Credits in the 21 st Century,” (2007) J.B.L. 35 at 376-377; See also, Commodities Finance Impact of UCP 600, A Guide to the New Rules, Reed Smith Richards Butler LLP (2007), An ICC Banking Commission Market Intelligence Report, at 27.
[12] It is reported that 11% of the bankers return discrepant documents without first seeking a waiver from the applicant; See, Gary Collier “Summary Assessment,” An ICC Global Survey, Rethinking Trade Finance, 2010, at 12; See also, Sara Younger, “The Reality of the Strict Rule,” DCINSIGHT, Vol. 16 No 1, January-March 2010, at 14. For legal interpretation of a word “may”, see also, Nicholl v. Allen [1862] 31 LJ QB 283; Cooper v. Hall [1968] 1 WLR 360.
[13] Article 2, UCP 600.
[14] See, Bergami, “What Can UCP 600 Do For You?” (2007) 11 VJ 1, at 1.
[15] See, Alan M. Christenfield & W. Melzer Shepard, New Rules for Letters of Credit, New York Law Journal, Thursday, February 1, 2007.
[16] Roberto, Bergami, Will the UCP 600 Provide Solutions to Letter of Credit Transactions? (June, 2007), Vol. 3, No. 2, International Review of Business Research Papers, at 41-53.
[17] Paul Todd, Bills of Lading and Bankers’ Documentary Credits, 4th Edition, Informa, London, 2007, at 281.
[18] Article 14(e), UCP 600.
[19] Article 14(j), UCP 600.
[20] The new Article 16 of the UCP 600 has modified the terms of Article 14 of the UCP 500 in dealing with discrepant documents.
[21] See, Article 16(a), UCP 600.
[22] Article 16(c), UCP 600. See also, Reinhard, Langerich, “An Improved UCP that Has Solved Many Problems,”DCINSIGHT, January-March 2007, at 3.
[23] Article 16(d), UCP 600.
[24] Article 16(c), UCP 600.
[25] See, Voest-Alphine Trading U.S.A Corp. v. Bank of China, 142 F.3d 887 (5th Cir. June 12, 1998).
[26] See, Articles 34, 35, 36 and 37, UCP 600.
[27] See, Langerich, n 23.
[28] Bergami, “What Can UCP 600 Do For You?” (2007) n 14 at 4.
[29] For instance, the issues of what constitute discrepancy or non-compliance can be guided by the provisions of Rule 23, definition of invoice by Rules C1-C2 and description of goods by Rules C3-C14, ISBP.
[30] See, Janet Ulp, “The UCP 600: Documentary Credits in the 21st Century,” (2007) J.B.L. Jun, 367; Gary Collyer, DCINSIGHT, Vol. 15.4, October-December 2009, at 3.

[31] See, LC Views, Interview with T.O. Lee, 2 April, 2006.

Wednesday, March 26, 2014

Bankruptcy is no escape for fraudster as Vethan Law Firm, PC (“VLF”) obtains verdict excepting debt from discharge.

Oftentimes con men and bad actors abuse the bankruptcy process in an effort to continue taking advantage of the people from whom they have stolen.  While a fraudster may run, he cannot hide even in bankruptcy.  Someone who tries to use bankruptcy to escape fraud may soon find the long arm of the bankruptcy Court to be swift and harsh.  The Vethan Law Firm recently handled just such a case in the Southern District of Texas, and on December 6, 2013 obtained a verdict for our client despite the Defendant’s two bankruptcy filings in which he tried to escape judgment.

The Defendant had fraudulently obtained Plaintiff’s funds while in a Chapter 13 (a reorganization chapter) bankruptcy (having never told the Plaintiff he was in bankruptcy), then, without informing the Plaintiff, converted his bankruptcy case to a Chapter 7 (the liquidation chapter) bankruptcy.  Defendant maintained at trial that despite having taken the Plaintiff’s money by fraudulent misrepresentations and not having noticed him properly, that the money Defendant owed to Plaintiff was discharged by the bankruptcy.

Wednesday, March 19, 2014

President Obama wants to expand overtime, what does this mean to your business?

 On March 13, 2014, President Obama declared “Americans have spent too long working more and getting less in return.” He then ordered the Labor Department to change federal rules on overtime and raise the required salary amount needed before an employee could qualify under exemptions under the Fair Labor Standards Act (“FLSA”). This order came after President Obama, by executive order, increased the minimum wage for workers under federal contracts to $10.10 an hour. Because of this, many businesses have rightfully began to worry if their company is compliant with the FLSA.

Pursuant to the FLSA, an employer who violates the act can face cumbersome record searches by the Department of Labor. Further, businesses can face both public and private lawsuits, including class action suits. Damages in the lawsuits include all determined unpaid or underpaid wages, an equal amount as liquidated damages, and attorney fees if the employer is found to be in violation of the act. From 2012 to 2013, FLSA cases rose 10 percent, and with recent attention by President Obama, those numbers do not look to be declining any time soon.

Friday, February 28, 2014

Dishonest Partner Pounded for $50 Million





The Vethan Law Firm, P.C. (“VLF”) is pleased to announce that a Harris County District Court recently entered a $50 million judgment in favor of our client, a minority shareholder in a regional placement and staffing company that placed personnel at various pipeline and steel yards across the United States.

Our client filed suit because he was excluded from management, deprived from examining the books and records of the company, and discovered that the controlling shareholder had taken company money and assets for his personal use, including buying lavish properties in the Texas Hill country, his personal home, and taking exorbitant trips to Las Vegas with his friends. In this case, what happened in Vegas did not stay in Vegas.

Tuesday, February 11, 2014

Avoiding The Crosshairs of Sole Proprietorships






Every business has a story. The beginning of their story is often humble with nothing but a novel idea and a steely determination. Sitting in a garage, spare bedroom, or booth of a diner an entrepreneur may create the next Apple, Google, or Amazon for the world. That is the American Dream; to create something truly from the “ground up.”  Initially most of these businesses operate as a sole proprietorship, meaning that there is no distinction between the business owner and the business itself.  This seems like a logical choice, as many business owners, especially those in specialized or technical areas, market their personal reputation and skills to grow their business. However, problems arise when that business evolves from a part-time home-based hobby to a growing and profitable venture.
You started a business to build something for yourself, to be independent, and let your success be determined by your skills and determination, while doing something you love to do. Most business people want to build an enterprise that someday will outgrow them. At some point, it is normal for a business to transition away from the owner working in the trenches, to hiring young guns or bringing in business partners to take the company to the next level.

Friday, January 31, 2014

The New Type of Copyright Owners


Our colleges and universities are producing more English, philosophy, and journalist majors in this decade than ever before. The number of recent graduates who desire to be self-published writers is dwindling, because most newly minted graduates are burdened with the ever increasing price of student loan debt. These proficient writers are entering the workforce as employees or contract labors; ultimately changing the face of copyrights. 
Generally the author/creator of a work owns the copyright in that work. However, the Copyright Act allows the owner of the copyright to pass to another person under the “work made for hire” doctrine.  The “work made for hire” doctrine allows the ownership of the copyright to pass not to the author/creator of the work but to the employer or benefactor of the author/creator.  Therefore, business owners and writers need to be aware of the “work made for hire” doctrine and how it affects copyright ownership.

Tuesday, January 14, 2014

How Clear is the Deal?




Business can be unpredictable, even in the regular course of business.  Most businesses have a clear understanding of their marginal rates of return, and know exactly what they need to most effectively conduct their operations.  But every business owner knows that some problems are not foreseeable.  In a contract, business owners write down what they need and what they expect.  Often an understanding appears simple – or is simple – but problems come up when conditions change or unexpected events take place.  The words chosen for a contract can lead to expensive and time-consuming litigation.   To minimize costs, every businessperson needs some basic information about contract drafting and contract interpretation.
The interpretation of a contract is a search of the terms in the contract and their use in the contract for the intent of the parties.  The intent of the parties is determined by what they write in the contract, as a whole, as written, and not a later interpretation according to what a party meant to express or later says that he or she meant.  Courts in Texas and most jurisdictions look to the “plain meaning” of the language written in a contract.  The “plain meaning” is just what the phrase sounds like:  the plain grammatical meaning, unless it definitely appears that intention of parties would be misconstrued.