![]() Legal advice: It is important to get professional advice from an experienced contract lawyer and have them review the contract to make sure there are no ambiguous terms that may cause future issues.Review: Have each party review the full and complete contract before each party assents to it and signs off on it and.It is important to note that other documents may sometimes not be allowed under the parol evidence rule.Other documents: Attach any other related documents to contract that could be used later on to clear any disagreements.Different meanings: If a particular word or phrase has two meanings, make sure that it has the same meaning for both parties. ![]() Writing: It is always best to put all the contract terms in writing.Ways to avoid ambiguities in a contract include, but are not limited to: The parties to a contract should always try to draft a contract in such a way that prevents future disagreements. However, courts will avoid this if it is certain that the parties intended the contract to be silent on a certain issue.Implied meanings: A court may simply fill in the blank and imply that a word has a certain definition, especially when the terms were left blank.If an interpretation leads to an impossible or unlikely outcome, a different interpretation will be favored and Reasonableness: A court will also consider whether one interpretation is more reasonable than another.This is useful when the parties have had consistent interactions in the past.Prior dealings: Ambiguities can be resolved by examining how the parties used the term in the past.Industry usage: A court may have to rely on the way a term is commonly used in a specific industry.In some cases parol evidence can be introduced in court, though this may vary by case.Parol evidence: Parol evidence refers to oral agreements that were reached prior to the formal signing of the contract, for example, in negotiations.This may be useful for everyday, non-technical terms. ![]() Common usage: Vague terms can be clarified by using the common usage of the term or the dictionary meaning.When a court is engaging in contract interpretation, it may use the following to help understand the parties’ intentions: Typically, if there is no evidence of fraud or misrepresentation between the parties to the contract, the court will allow the parties to rewrite the contract to resolve the ambiguity. A court may determine that the work meant Canadian dollars if both parties to the contract were from Canada and had a history of using Canadian dollars to measure insurance limits in their previous business transactions.Ĭourts may use a wide variety of facts and circumstances surrounding a contract to determine the meaning of an ambiguous term. ![]() The term dollar may be ambiguous here because it can mean either U.S. For example, the contract may have a reference to a dollar amount in a Canadian insurance contract. One common example of an ambiguous contract arises when the definition of a word is not clearly defined in the contract. What’s an Example of an Ambiguous Contract? ![]()
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