Date: Feb 28, 2026

Incorporated Term Controls Over Conflicting Form Language: Earnest Money Nonrefundability and Good-Faith Negotiation in Business Sale Agreements

I. Introduction

Galpin v. Cantina Holdings, 2026 ND 54 addresses a recurring transactional problem: parties begin with a negotiated letter of intent (or “offer letter”), later sign a realtor- or industry-standard purchase agreement, and the documents contain inconsistent provisions—here, who keeps a $100,000 earnest money deposit after the deal fails to close.

Parties. Neil Galpin (as assignee of Galpin Entertainment, LLC, seller of The Pier Bar & Grill) sued Cantina Holdings, LLC and Clay Butte Holdings, LLC (buyer/assignee) for a declaratory judgment that the earnest money became non-refundable. Defendants counterclaimed for the deposit and asserted breach of contract and related tort/equitable theories.

Key issues. (1) When multiple writings are executed as part of one transaction and contain conflicting earnest-money/financing-contingency terms, which provision governs—especially where the later purchase agreement expressly incorporates the earlier, specially drafted letter? (2) Did the seller act in bad faith during negotiations over the contract-for-deed financing by requesting personal guarantees late in the process?

II. Summary of the Opinion

The North Dakota Supreme Court affirmed the judgment awarding Galpin the $100,000 earnest money deposit. The Court held:

The district court correctly interpreted the integrated writings. The non-refundable earnest money term in the confidential letter controlled over conflicting standard-form financing-contingency language in the purchase agreement.
The district court did not clearly err in finding the seller did not fail to negotiate in good faith over contract-for-deed terms; the parties were close to agreement, continued negotiating, and even extended the closing date after the personal-guarantee request.

III. Analysis

A. Precedents Cited

1. Metcalf v. Security Int'l Ins. Co.

The appellants relied on Metcalf v. Security Int'l Ins. Co., 261 N.W.2d 795 for the proposition that a later-in-time agreement supersedes inconsistent earlier provisions. The Court acknowledged Metcalf’s general rule (later contract provisions can supersede earlier ones when addressing the same subject matter and parties). However, it distinguished Metcalf on a critical fact: the purchase agreement here expressly stated the confidential letter “is hereby made part of the purchase agreement.” Because the earlier writing was incorporated into the later writing, the Court rejected the appellants’ attempt to treat the documents as competing instruments with a simple chronology-based priority.

Influence on decision: Metcalf framed the appellants’ theory, but the Court used the incorporation language to confine Metcalf and to emphasize that “later-in-time” logic weakens where the parties deliberately integrate the earlier terms into the later contract.

2. Spagnolia v. Monasky

Citing Spagnolia v. Monasky, 2003 ND 65, 660 N.W.2d 223, the Court reiterated that contract interpretation is a question of law when intent can be ascertained from the writing alone. This supported de novo appellate review of the legal effect of the writings while leaving factual findings (e.g., good faith) to clear-error review.

3. RTS Shearing, LLC v. BNI Coal, Ltd.

With RTS Shearing, LLC v. BNI Coal, Ltd., 2021 ND 170, 965 N.W.2d 40, the Court reinforced the statutory directive that multiple contracts “relating to the same matters between the same parties and made as parts of substantially one transaction are to be taken together.” This principle supported reading the confidential letter, purchase agreement, and extension agreement as a unified transaction, rather than isolating the purchase agreement’s boilerplate to defeat the negotiated deposit term.

4. City of Bismarck v. Mariner Constr., Inc.

The Court invoked City of Bismarck v. Mariner Constr., Inc., 2006 ND 108, 714 N.W.2d 484 for the rule, codified at N.D.C.C. § 9-07-19, that uncertainty is construed against the party who caused it. The Court applied that doctrine pointedly: the appellants’ representative drafted the confidential letter with the non-refundable term and then introduced a standard-form purchase agreement (prepared on their behalf) containing conflicting earnest-money language—so they “cannot now benefit from the uncertainty they caused.”

5. Olson v. Peterson

The Court relied on Olson v. Peterson, 288 N.W.2d 294, applying N.D.C.C. § 9-07-16: where part of an instrument is “purely original” (specially drafted) and the remainder is copied from a form, the original part controls, and repugnant form language must be disregarded. Olson provided the doctrinal bridge that elevated the negotiated confidential letter term over the purchase agreement’s checkbox boilerplate.

6. Belfield Educ. Ass'n v. Belfield Pub. Sch. Dist.

On good faith, the Court cited Belfield Educ. Ass'n v. Belfield Pub. Sch. Dist., 496 N.W.2d 12 for the method of evaluating bargaining conduct holistically rather than focusing on isolated actions. This precedent supported affirmance where the “late-stage” personal-guarantee request did not, in context, show an absence of a sincere desire to reach agreement.

7. Continental Resources, Inc. v. Armstrong

The Court used Continental Resources, Inc. v. Armstrong, 2021 ND 171, 965 N.W.2d 57 to articulate the clearly erroneous standard for bench-trial fact findings and to emphasize deference to the trial court’s credibility determinations. This constrained appellate reweighing of testimony about negotiation dynamics and motivations.

B. Legal Reasoning

1. Integrated reading of transaction documents

The Court applied North Dakota’s contract-interpretation statutes: N.D.C.C. § 9-07-03 (mutual intent), § 9-07-04 (intent from writing alone if possible), § 9-07-06 (construe as a whole to give effect to each provision), and § 9-07-07 (multiple contracts in one transaction taken together). Within that framework, it identified a direct conflict:

Confidential letter: earnest money becomes non-refundable upon due diligence satisfaction or March 30, 2023 (whichever first), and refundable only if buyer informs seller before that date that it does not wish to proceed.
Purchase agreement form: pre-printed/checkbox provision stating that if financing fails after the contingency completion date, earnest money shall be released to the buyer.

2. Two priority rules resolve the conflict

The Court used two complementary rules to resolve the inconsistency:

Contra proferentem (N.D.C.C. § 9-07-19): ambiguity is interpreted against the party who caused it. Because the appellants drafted the non-refundable term and introduced the conflicting form language, the uncertainty was construed against them.
Original-over-form (N.D.C.C. § 9-07-16, Olson v. Peterson): specially drafted terms control over standard form provisions, and repugnant form language is disregarded. The confidential letter’s negotiated term was “special,” while the financing-contingency language was “standard form” checkbox text.

3. Incorporation defeats the “later-in-time supersedes” argument

The Court’s most precedent-setting clarification is its treatment of Metcalf’s timing principle: where a later purchase agreement expressly incorporates an earlier agreement, the Court refused to treat the earlier agreement as merely “superseded.” Instead, incorporation collapses the temporal hierarchy because the parties have chosen to make the earlier terms part of the later contract’s content.

4. Good faith negotiation is a fact question assessed holistically

The appellants argued that requesting personal guarantees nine days before closing proved bad faith. Applying Belfield’s holistic approach and Continental Resources’ deference to trial factfinding, the Court affirmed because: (i) drafts showed the parties were close to agreement; (ii) communications continued after the request, including discussion of alternatives; (iii) the buyer sought—and received—an extension after the request, signaling negotiations were still alive; and (iv) the district court found credibility problems in appellants’ allegations.

C. Impact

Drafting and deal-structure discipline: Parties who introduce conflicting boilerplate into a deal risk having the conflict resolved against them (N.D.C.C. § 9-07-19) and risk losing reliance on the boilerplate when it conflicts with negotiated language (N.D.C.C. § 9-07-16).
Letters of intent and incorporation clauses: When a purchase agreement states an earlier letter “is hereby made part of the purchase agreement,” courts may treat the earlier letter as fully integrated, not displaced by later form terms—narrowing arguments based purely on chronology (as attempted under Metcalf).
Earnest money litigation: The decision strengthens sellers’ positions where (a) the non-refundable trigger is clearly stated in a negotiated document and (b) the buyer misses the termination deadline, even if later closing mechanics (like a contract for deed) remain to be finalized.
Good-faith negotiation claims: The opinion signals that “late-stage” hard bargaining (e.g., asking for guarantees) is not automatically bad faith; courts will look for overall obstruction, refusal to engage, or pretextual conduct, and will defer heavily to trial-court credibility assessments after bench trials.

IV. Complex Concepts Simplified

Earnest money: A deposit (often held in escrow) showing the buyer’s commitment. Depending on the contract, it may be refundable (returned if certain conditions occur) or non-refundable (kept by the seller if the buyer does not proceed).
Due diligence period: A defined window for the buyer to investigate the business/property and decide whether to proceed. Contracts often specify what happens to earnest money if the buyer cancels within this period.
Contract for deed (seller financing): A financing arrangement where the buyer pays over time and the seller retains title until the buyer completes payments (terms vary). Negotiating the detailed instrument can be extensive even after a purchase agreement is signed.
Financing contingency / condition precedent: A contract provision stating the buyer’s obligation to close depends on obtaining financing (or finalizing financing documents). If the condition is not satisfied, the buyer may be allowed to terminate and recover earnest money—if the contract so provides.
Incorporation by reference: A drafting technique where one document states that another document is made part of it. Once incorporated, the incorporated document is treated as contract text, not merely background.
Contra proferentem (ambiguity against the drafter): When contract language is uncertain, courts may interpret it against the party who created the uncertainty. In this case, the buyer-side drafting created conflicting earnest-money terms.
Standard form vs. specially drafted terms: Boilerplate forms (checkboxes and pre-printed clauses) are convenient but may not match the parties’ negotiated deal. North Dakota law gives priority to the parties’ specially drafted, transaction-specific terms when they conflict with form language.

V. Conclusion

Galpin v. Cantina Holdings reinforces two core contract-construction principles with practical transactional consequences: (1) where an agreement incorporates an earlier, negotiated writing, courts will not allow later standard-form boilerplate to override the incorporated negotiated term—especially when the same party created the inconsistency; and (2) alleged failures to negotiate “in good faith” are assessed by overall conduct and are strongly shaped by trial-court credibility findings.

The decision’s broader significance lies in its cautionary message: parties who rely on forms must reconcile them with negotiated deal documents, or risk losing key protections—here, the buyer-side attempt to reclaim earnest money after missing the due-diligence termination window.