Contract Terms Construed Against Drafter: Understanding the Implications
When it comes to drafting contracts, it`s important to understand the principle of contra proferentem, which means “against the drafter.” This principle is used by courts to interpret ambiguous language in a contract against the party who drafted it. This means that if there`s any ambiguity in a contract, the interpretation will be made against the person who wrote it. This can have significant implications on the enforceability of contract terms and the liability of the parties involved.
What is Contra Proferentem?
The principle of contra proferentem is used when the language of a contract is ambiguous, uncertain, or susceptible to different interpretations. In such cases, the court will interpret the contract in a way that is most favorable to the party that did not draft it. The rationale behind this principle is that the party who wrote the contract is in a better position to clarify any ambiguities or uncertainties in the contract language. Therefore, if the language is unclear, the court will not hold the other party accountable for the drafter`s ambiguity.
When is Contra Proferentem Applied?
Contra proferentem is applied in different situations. One of the most common situations is when a contract is used in a consumer transaction. In such cases, the consumer is the weaker party, and the business entity has the power to draft the contract terms to its advantage. As a result, courts tend to favor the consumer in interpreting any ambiguous language in such contracts.
Contra proferentem is also applied in employment contracts, where the employer is typically the drafter of the contract. The principle is used to ensure that employees are not unfairly bound by ambiguous or unclear contract terms, especially when such terms are in favor of the employer.
Implications of Contra Proferentem
The implications of contra proferentem are significant. If a court determines that an ambiguous contract term is in favor of the drafter, it may not be enforceable. This means that the party who drafted the contract may not be able to rely on that term to hold the other party accountable. The other party may also be able to use the ambiguity to their advantage.
In addition, contra proferentem can increase the liability of the drafter. If the court interprets an ambiguous contract term against the drafter, they may be held responsible for any damages or losses incurred by the other party. This can have serious financial implications, especially if the contract involves a large amount of money.
In conclusion, it`s essential for contract drafters to understand the implications of contra proferentem. By doing so, they can ensure that their contracts are clear and unambiguous and avoid legal disputes. It is also important for businesses to engage the services of a professional professional who can help ensure that their contracts are well-crafted and easy to understand. This will not only protect them from any unfavorable interpretations but also enhance their reputation and build trust with their partners and customers.