GENERAL LEGAL PRINCIPLES; CONTRACT ENFORCEMENT/ INTERPRETATION – General Principles of Contract Interpretation

Single Topic for Decision 2684E

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In interpreting a contract, the Board relies on traditional rules of contract interpretation and uses the California Civil Code as a guide. Hence, the Board begins analyzing a contract by examining the parties’ intent, as demonstrated by the ordinary and plain meaning of the contract language. (p. 15.)

When contract terms are ambiguous, PERB may look to extrinsic evidence such as bargaining history to discern the parties’ intent. Bargaining proposals and parties’ discussions of those proposals are the most probative forms of extrinsic evidence in interpreting a collective bargaining agreement. Testimony regarding a party’s subjective understanding of a contract provision is of minimal value absent evidence that the parties mutually discussed their respective understandings during bargaining. (pp. 16-17.)

PERB may ascertain established policy from past practice where the contract is silent or ambiguous as to a policy. (p. 17.) “The parties’ practical construction of a contract, as shown by their actions, is important evidence of their intent, and helps us to resolve ambiguities in the contract.” [Citation.] However, evidence of past practice based upon a union’s acquiescence to a previous unilateral change is not relevant to a waiver defense because such acquiescence does not operate as a waiver of the right to bargain for all times. (p. 18.)