Identifying Ambiguity; other rules of interpretation

Question 1

When is a contract ambiguous?

Answer 1

A contract is ambiguous when the terms of the contract could suggest moe than one meaning when viewed objectively by a reasonably intelligent person who has examined the context of the entire integrated agreement and who is cognizant of the customs, practices, usages, and terminology as generally understood inf the particular trade or business.

Question 2

What must the court give effect to?

Answer 2

The expressed intentions of the parties; the best of evidence of what the aprties intend is what they say in their writing

Question 3

Ambiguity should not be based on . . .

Answer 3

an interpretation urged by one party where that interpretation would strain the contract language beyond its reasonable and ordinary meaning.

Question 4

What is a warranty?

Answer 4

A warranty is a promise that an assertion of fact is true, supported by an implied promise of indemnity if the assertion is false.

Question 5

If a warranty is false, it is . . .

Answer 5

breached.

Question 6

If a warranty is breached, . . .

Answer 6

damages for breach of contract.

Question 7

What is a representation?

Answer 7

An assertion as to a fact, true on the date the representation is made, that is given to induce some other party to enter into a contract or take some other action.

Question 8

If a representation is false, it is . . .

Answer 8

inaccurate.

Question 9

If a represenation is breached, . . .

Answer 9

remedies for misrepresentaiton, such as right to terminate the agreement, liquidated damages, acceleration clause.

Question 10

What are the four restatement second standards of preference for interpreting contracts?

Answer 10

1. An interpretation which gives a reasonable, lawful, and effective meaning to all the terms is preferred to an interpretation which leaves a part unreasonable, unlawful, or of no effect;
2. Express terms are given greater weight than course of performance/dealing/trade; course of performance greater weight than dealing or trade; course of dealing greater weight than trade
3. Specific terms and exact terms are given greater weight than general language
4. Separately negotiated or added terms are given greater weight than general language

Question 11

What is the restatement second rule of interpretation against the drafter?

Answer 11

In choosing among the reasonable meanings of a promise or agreement or a term thereof, that meaning is generally preferred which operates against the party who supplies the words or from whom a writing otherwise proceeds.

Question 12

Noscitur a sociis

Answer 12

The meaning of a word in a series is affected by others in the same series; or a word may be affected by its immediate context.

Question 13

Ejusdem generis

Answer 13

A general term joined with a specific one will be deemed to include only things that are like the specific one.

Question 14

Expressio unius exclusio alterius

Answer 14

If one or more specific items are listed, without any more general or inclusive terms, other items although similar in kind are excluded.

Question 15

Ut magis valet quam pereat

Answer 15

An interpretation that makes the contract valid is preferred to one that makes it invalid.

Question 16

Omnia praesumuntur contra proferentem

Answer 16

Essentially, construed against the drafter

Question 17

Interpret contract as a whole

Answer 17

A writing or writings that form part of the same transaction should be interpreted together as a whole, that is, every term should be interpreted as a part of the whole and not as if isolated from it.

Question 18

Purpose of the parties

Answer 18

The principal apparent purpose of the parties is given great weight in determining the meaning to be given to manifestations of intention or to any part thereof.

Question 19

Specific provision is exception to a general one

Answer 19

If two provisions of a contract are inconsistent with each other and if one is general enough to include the specific situation to which the other is confined, the specific provision will be deemed to qualify the more general one, that is to state an exception to it.

Question 20

Handwritten or typed provisions control printed provisions

Answer 20

Where a written contract contains both printed (think of a form) provisions and handwritten or typed provisions, and the two are inconsistent, the handwritten or type provisions are preferred

Question 21

Public interest preferred

Answer 21

If a public interest is affected by a contract, that interpretation or construction is preferred which favors the public interest,

Question 22

How are adhesion contracts interpreted for ambiguity?

Answer 22

• Unconscionable terms will not be enforced
• Ambiguous terms are construed against the drafter