Ambiguous wording in contracts

One of the tasks of the contract draftsman is to try to avoid using words and phrases that could have more than one meaning. Here are a few expressions (only some of which regularly feature in contracts) that could mean the opposite of one another, depending on the context:

To the Licensors knowledge, the moon is made of cheese

This is usually intended to mean as far as the Licensor is aware, but it could conceivably be interpreted as a statement that the Licensor has personal knowledge that enables him to assert positively the composition of the moon. We prefer to use the as far as aware formula, as it does not have this potential ambiguity. (There is a separate question as to whether such a warranty implies any duty to check or do searches, but that is a different issue.)

Completion.

In contracts, completion often refers to an event where formal documents are signed to give effect to a transaction, ie at the start of the transaction. The US equivalent of this is closing. However, completion of a contract could refer to when the work to be performed under a contract has been completed, ie at the end of the contract. We have encountered clients who have used the word with this sense. Where the word is used in a contract, it is prudent to check that there is no ambiguity in context.

Sanction.
This can mean: permit or prohibit.

Oversight.

This can mean:

supervision or mistake.

Screen. This can mean: hide from view or show.

Fabulous.

This can mean:

wonderful or unbelievable.

This is not the only type of ambiguity that can arise in contracts, but it is often the most striking to the reader

"Apparent" can mean: "obvious" or "seeming, but in fact not". "Awful" can mean: "worthy of awe" or "very bad". "Back" can mean: "regressive" as in "to go back in time", or it can mean: "progressive" as in "to push back a deadline". "Buckle" can mean: "fasten securely" as in "buckle your seat belt", or it can mean "fall apart" as in "buckle under pressure".

"Citation" can mean: "commendation" or a "summons to appear in court". "To cleave" can mean: "to cling" or "to split". "To comprise" can mean: "to consist of" or "to make up or constitute". "To dust" can mean: to remove dust (cleaning a house) or to add dust (dust a cake with powered sugar).

"Fast" can mean : "moving quickly" as in "running fast," or it can mean "not moving" as in "stuck fast." "To fight with someone" can mean: "to fight against someone" or "to fight alongside someone". "Impregnable" can mean: "able to be impregnated" or "incapable of being entered".

"Moot" can mean: worthy of discussion or not worthy of discussion. "Nonplussed" can mean: surprised and confused, but has come to mean unperturbed in North American English. "To overlook" can mean: "to inspect" or "to fail to notice". "Oversight" (uncountable) means: "supervision", "an oversight" (countable) means "not noticing something".

"Off" can mean: "deactivated" as in "to turn off", or it can mean "activated" as in "the alarm went off". "To peruse" can mean: "to examine in detail", or "to look over in a cursory manner" "Redundant" can mean: "useless" or "extra caution". "Refrain" means : both non-action and the repetition of an action, e.g. in musical notation.

"Resign" can mean: "give up or quit" or "continue". "To sanction" can mean: "to permit" or "to punish". "Shelled" can mean: "having a shell" or "has had the shell removed" (as in shelling). "To skin" means: "to cover with skin" (as in to skin a drum) as well as "to strip or peel off" (as in to skin an animal). "To stint" means: "to stop", but the noun "stint" refers to the interval of work between stops.

"Strike", in baseball terms, can mean: "to hit the ball" or "to miss the ball". "To weather" can mean : "to endure" (as in a storm) or "to erode" (as in a rock). "Weedy" can mean : "overgrown" ("The garden is weedy") or stunted ("The boy looks weedy"). "Yield" can mean: "to produce" (as in a chemical equation) or "to concede" (as in driving). "Ravel" can mean: to combine thread or to separate it. "Terrific" can mean: "very good" or "very bad".

Below is a list of many such words, and their associated opposite (or near-opposite) meanings. (Note contradiction in meanings)

adumbrate verb aught noun bill noun bolt verb bound adj./verb

to clarify to cast a shadow over anything nothing invoice (e.g. in a restaurant) money; banknote to secure in place to dash away suddenly restrained (e.g. by rope) to spring; leap

 to fasten buckle to come undone; give way; verb collapse cleave to adhere; stick together verb to cut apart; divide to fasten together; hold tightly clip to cut apart; cut off (e.g. with verb shears) comprise to contain; include verb to be composed of; consist of custom usual; normal adjective special; unique

dust verb fast adverb fine adjective give out verb handicap noun/verb

to remove fine particles from (e.g. when cleaning) to sprinkle fine particles onto fixed firmly in place moving quickly; speedy just meets minimum standards; satisfactory considerably better than average; excellent to produce; distribute to stop producing; cease functioning advantage (e.g. in sport) disadvantage; disability

hold up verb impregnable adjective lease verb left verb let verb literally adverb

to support; cope to hinder; delay impossible to enter (e.g. of a fortress) able to be impregnated to lend; rent out to borrow; hire departed from remaining to allow; grant permission to prevent (e.g. "without let or hindrance") actually; really figuratively; virtually

model noun moot adjective overlook verb oversight noun peer noun put adj./verb

archetype; example copy; replica debatable; arguable academic; irrelevant to examine; watch over to fail to notice; miss watchful care; supervision overlooking; omission an equal; fellow (e.g. classmate) a nobleman; person of higher rank to begin to move hurriedly stationary (e.g. "stay put")

put out verb puzzle verb quantum adjective ravel verb rent verb

to generate; produce to extinguish; put an end to to pose a problem to solve a problem very small (e.g. in Physics) very large (e.g. "quantum leap") to tangle; complicate to disentangle; separate to lend; lease out to borrow; hire

resign verb root verb sanction verb/noun sanguine adjective scan verb

to quit; give up to sign up again to remove completely to become firmly established to endorse; authorise a punitive action murderous cheerfully optimistic to examine closely to glance at hastily

screen verb seed verb set verb shank noun skin verb

to view; show to conceal; shield to remove seeds from to add seeds to to fix in place to flow; move on latter part of a period of time early part of a period of time to cover with a skin to remove the skin

splice verb strike verb table verb temper verb

to join together to cut in two to miss (e.g. in baseball) to hit; collide with to propose; suggest to postpone; shelve to soften; mollify to strengthen (e.g. a metal)

trim verb

to cut pieces off (e.g. fingernails) to add to; ornament

weather to withstand; stand up to to wear away verb wind up to start; prepare verb to end; conclude

Interpretation of

Ambiguous contracts

A contract is ambiguous when it is uncertain what the intent of the parties was and the contract is capable of more than one reasonable interpretation. Sometimes ambiguous terms can be explained by the admission of parol evidence. Also, Courts abide by the rule that an ambiguous contract is interpreted against the party who drafted it. In other words, the party who did not draft the contract will be given the benefit of the doubt so to speak. Also, sometimes the background or circumstances surrounding the contract can eliminate ambiguity

For example, in a Minnesota case, suit was brought in Minnesota on a Canadian policy of insurance. The question arose as to whether the dollar limit of the policy referred to Canadian dollars or American dollars. The Court concluded that Canadian dollars were intended since the insurer and the insured were both Canadian corporations, the policy was entered into in Canada, and over the years premiums had been paid in Canadian dollars, and a prior claim on the policy had been settled by using Canadian dollars.

Again, if two interpretations are reasonably possible, the contract will be interpreted in favor of the person who did not draft the contract and against the person who did draft it. An example of this would be preprinted insurance policies. Any clause which is capable of two interpretations will usually be interpreted against the insurer and in favor of the insured.

Sometimes a Court may imply a term to cover a situation where the parties fail to provide the term. The Court may also imply a term if its necessary to give a contract a construction or meaning that is reasonable. For example, if a contract does not state its duration, the Court may imply that the contract is to be performed or continue for a reasonable time reasonable in relation to the type of contract that it is. However, a term will not be implied in a contract when the Court concludes that the parties intended for the contract to be silent on a particular point.

In every contract there exists an implied covenant of good faith and fair dealing. For example, when a contract to purchase a house is made subject to the condition that the buyer can obtain financing, the buyer must make a reasonable good faith effort to obtain the financing or be held in breach of the contract. The implied duty to act in good faith means an honest, good faith effort to satisfy the condition of the contract.

As a general rule, a party is bound by a contract even if it proves to be a bad bargain. However, if a court is called upon to interpret a contract, if possible, the court will interpret it in such a way as to avoid hardship, particularly when the hardship would hurt the party who had the weaker bargaining position.

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