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Contract Principles Used to Interpret Property Settlement Agreement

By Snyder & Sarno on December 17, 2014


When parties divorce, they are often able to come to an agreement on their own.  In New Jersey, this agreement is often called a property settlement agreement or a marital settlement agreement.  It delineates the party’s agreement on issues such as alimony, child support, child custody, or property division.  However, parties can run into problems when the terms of their agreement are conflicting.

The parties in Paintsil v. Oppong-Manu ran into this exact problem, prompting litigation.  The parties’ property settlement agreement stated that the ex-husband would buy out the ex-wife’s interest in the former marital home.  The agreement further set forth the buyout amount as approximately $23,000.  However, if the ex-husband couldn’t refinance the existing equity line of credit or buy out the ex-wife’s interest, the home would be sold and the proceeds would be equally divided.  When the housing market crashed, the value of the home plummeted and the ex-husband could not refinance or buy out the ex-wife’s interest, causing him to argue that the home should be sold.  The ex-wife sought payment of the $23,000 sum nevertheless.

The trial court ordered the ex-husband to pay the $23,000 sum, but on appeal, the Appellate Division reversed and remanded the case.  The Appellate Division stated that the trial court must apply contract principles to determine the meaning of the property settlement agreement’s terms where they were ambiguous.  See Pacifico v. Pacifico, 190 N.J. 258, 266 (2007).  In addition, the court must determine the parties’ intentions in discerning the meaning of the agreement.  The court may allow extrinsic evidence, or outside evidence, to figure out the meaning of the contract’s terms. 

In order to draft an agreement that is not ambiguous, the help of a skilled matrimonial attorney, like those at Snyder & Sarno, LLC, is important.  If you are going through a divorce in New Jersey and think you may be able to come to an agreement with your soon-to-be ex-spouse, contact the attorneys at Snyder & Sarno, LLC to help make sure finalizing your divorce and property settlement agreement goes smoothly.  Call us today at (973) 274-5200.   

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