Posted: July 1st, 2022

Factors for Ambiguous Contract Provisions

Factors for Ambiguous Contract Provisions

Below is Veleria’s Leader post for this topic:

This unit’s discussion post is: If a court finds that a provision of a contract is ambiguous, what factors can a court consider in order to determine the meaning of that provision? Do you think any one (or multiple factors) are more important?
I think back to my last assignment I turned in and left off the dates. I knew in my mind there should be dates, but in every example I saw, there were no dates, so I assumed that the dates at the end, on the signature line, were sufficient; Well not so. HA! But mine was for an assignment and not something more serious. So I am going to speak from that and if our Professors had taken me to court with that assignment. So let’s look back to what I wrote and how I could have caused a problem being ambiguous.
“This agreement shall be effective from the date it is made and shall continue in force for a period of one (1) year from the date it is made; thereafter it shall continue and auto renew for six (6) additional months, unless and until terminated by either party with a 60-day notice before the end of the first (1) year.”
We read that when in business, one should always check carefully that there are no ambiguities or rist of the courts applying multiple factors to decide what the contract means. What I did was left that open to decide whether the intent was the date it was signed, or the date it was executed. Who’s to say that both parties signed on the same day and then when was the contract actually executed. Then the other question could be what if the “60 day” notice fell on a Saturday, is it the reasonable interpretation that one party will notify the other on a Saturday or wait until a business day; then would that be the Friday before or the Monday after?
In the reading it states “There is a general rule that a court will construe ambiguous contract terms against the drafter of the agreement. But this rule only applies where one contracting party is in a superior bargaining position, usually either as a result of greater experience or the Helpance of a counsel.”
Based on my above example of homework, In life, I would make sure there were dates and I would hope that during the term of the contract, I kept good records to show “good faith” in my actions and would be able to go to those records (with dates) and show that it should or should not be auto renewed. Far too many people do not keep accurate records and when something like this comes up, find themselves at the mercy of the court to interpret. I found myself in a similar situation with Sprint Cellular years ago and did not keep good notes to who I talked to and when. So in that situation, I lost and ended up paying my way out of that contract but since then, I’ve done a great job at documenting everything! Right now I am in a situation where my outdoor furniture has not been delivered by BJ’s, however, it’s showing delivered on their site. I have good notes and was able to give them dates and people I spoke to along the way. I am
expecting a good result; although I still don’t have my outdoor furniture! I am hoping this will not have to go to court, but if it does, I am prepared. Have you had a situation where you were involved in or prepared an ambiguous contract?

Factors for Ambiguous Contract provisions
Hello Valeria. Reading your post was enlightening as you used about three real life experiences. Your ability to relate your experiences to the discussion makes it easy to understand your point of view in analyzing the given questions. First, I would like to agree with you on your assignment example. The fact that you were not specific about dates left out a gap that would have landed you in trouble if your professors did take you to court. Learning from experience is the best way as one is able to do better the next time. As per my research, some of the factors I found to influence a court’s reasoning on ambiguous contracts included: reasonableness, implied meaning, parole evidence, and prior dealings (Legal Match, n.d). When it comes to reasonableness, the court holds interpretations highly. I found this factor to be more important than the others since the court considers the possibility or impossibility of outcomes. When two parties sign a contract they may have understood the terms differently (VLF, 2019). It is only during a conflict that the misunderstanding surfaces. It is good to know that after your situation with Sprint Cellular you decided to start keeping good notes. Ambiguous contracts can be avoided by taking good notes about contract terms, taking legal advice and reviewing the complete contract. I hope that your issue of undelivered furniture by BJ’s will be resolved. Since BJ’s is an expert supplier, they should have informed you of any material adversities. If they did not, then they are liable to remedy the position at their own cost (Watton, 2018). Luckily, I have not been involved in any situation relating to ambiguous contracts but it was enlightening to learn from yours. Thank you.

References
Legal Match. (n.d). What is an ambiguous contract? Retrieved from https://www.legalmatch.com/law-library/article/ambiguous-contracts.html#:~:text=But%20usually%2C%20an%20ambiguous%20contract,to%20have%20the%20issues%20resolved.
Watton, A. (2018). Ambiguous contract terms being used against you? 4 little known facts to stop the unfairness and add clarity. Retrieved fom https://www.bestpracticegroup.com/ambiguous-contract-terms/
VLF. (2019). Contract Ambiguity. Vethan Law Firm Retrieved from https://info.vethanlaw.com/blog/contract-ambiguity

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