Ambiguous Terms

Question 1

A guiding principle of interpretation is:

Answer 1

determine the intent of the parties

Question 2

What is the analytical framework for Ambiguous Terms?

Answer 2

Step 1: Identify Interpretation Issues (Question 1: Do the Parties Have a Dispute Over the Meaning of a Term?
Question 2: Is the Term (or Contract) Ambiguous?)
(Rule: To be an interpretation issue, the parties have to literally assign a
different meaning to an express term in the contract.)

Step 2: Apply the Primary Rules of Interpretation

Step 3: If Needed, Apply the Secondary Rules of Interpretation

Question 3

Step 1 Question 2 for Identifying Interpretation Issues: how do you tell if a term or contract is ambiguous?

Answer 3

Rule: An ambiguity exists if (1) the meaning of a term is uncertain or (2) the term is reasonably susceptible to more than one interpretation.

Classic Jurisdiction: classic jurisdictions only consider the plain meaning of a term to resolve whether a term is ambiguous. To determine the plain meaning, courts use
dictionaries and common sense. If a term is
used in a technical sense, then the court assigns the technical meaning to the term. If a term does not have more than one ordinary meaning, then the classic jurisdiction does not consider the dispute.

Modern Jurisdiction: the modern jurisdiction uses all of
the facts and circumstances in order to determine whether
there is an ambiguity. In order to resolve the ambiguity, these courts allow evidence other than the contract itself
Reasonable Susceptibility: Courts ask whether the contract
language is “reasonably susceptible” to the interpretation being asserted. If the meaning ascribed is absurd given the context, a judge may declare the contract unambiguous.

Question 4

Step 2 for interpreting Ambiguous Terms: what are the primary rules of interpretation?

Answer 4

Language of the Express Terms
○ Ordinary Meaning
○ Technical Meaning
○ Consider the Surrounding Circumstances
○ Contract Construed as a Whole
● Course of Performance/Conduct
● Course of Dealing
● Trade Usage/Custom

Question 5

Ambiguous Terms: What are the secondary rules of interpretation?

Answer 5

1. Preference to Interpret Contracts as Valid, Lawful,
   and Reasonable
2. Conflicts Between Clauses
3. Ejusdem Generis
4. Interpretation Against the Drafter