Ambiguity in any writing is annoying, but in a contract it can be devastating if you wrote it, because any ambiguity in a contract is likely to be construed against you. Here are some ways to avoid ambiguity in your next writing.
The general rule when it comes to contract ambiguity is: Any ambiguity in a contract not resolved by other rules of construction is construed against the party who prepared the instrument (or the party whose attorney prepared the instrument). CC §1654.
That rule is a major incentive to keep your writing as unambiguous as possible. Here are four tips from the basic rules of composition that will help:
- Keep your sentences short.
- Start every sentence with the subject, follow closely with the verb, and end with the object.
- Place all adjectives close to the words they modify.
- Use words consistently throughout a document, e.g., if the agreement defines or uses “days” to mean “business days” at one point in a contract, then it may confuse the reader to use “days” in another part of the same document to mean “calendar days”.
Keep in mind that a “Defined Terms” section of a contract may alter the commonly understood meaning of a term; always use the defined meaning of the term consistently throughout the document. If a defined meaning gives a term an obscure meaning, the definition should occur at the first use of the term.
And if a transaction involves multiple contracts, make sure that all documents use terms consistently. If this isn’t possible, the contract should warn that the terms in one contract do not necessarily have the same meaning as those terms have in related contracts.
Here are a couple of examples of ambiguity and how to fix it:
“A claim for damages, which shall not exceed $1000, must be filed with the court.” (What is it that may not exceed $1000, the claim or the damages?)
“Claims for damages may not exceed $1000 and must be filed with the court.”
“ABC Corp. is the wholly owned subsidiary of XYZ Co., which shall execute the guaranty.” (Who signs the guaranty, ABC or XYZ?)
“ABC Corp. is the wholly owned subsidiary of XYZ Co. ABC Corp. shall execute the guaranty.”
Although it’s always better to avoid ambiguities in your contract drafting, you may want to cover yourself by including a provision that negates the general rule that ambiguities are construed against the drafter. Of course you may not get an agreement on this, because the drafter will favor a neutral interpretation of the contract while the other attorney may resist any attempt to vary the general rule of interpretation.
But if you can get agreement, here’s a sample provision to use when both parties have been involved in negotiating and drafting the agreement (delete or modify the first sentence if one party hasn’t in fact fully participated in the drafting process):
Ambiguities. Each party and its counsel have participated fully in the review and revision of this Agreement. Any rule of construction to the effect that ambiguities are to be resolved against the drafting party shall not be applied in interpreting this Agreement.
For more practical guidance on all aspects of contract drafting, turn to CEB’s Drafting Business Contracts: Principles, Techniques and Forms. On contract law generally, check out CEB’s generally California Law of Contracts.
Other CEBblog™ posts you may find useful:
- Turn Legalese into Plain English
- The Secret to Better Legal Writing
- 7 Ways to Get Sexism Out of Your Writing
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