DISCERNING THE AGREEMENT Ambiguous or Vague Terms Flashcards Preview

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Flashcards in DISCERNING THE AGREEMENT Ambiguous or Vague Terms Deck (4)
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1
Q

DISCERNING THE AGREEMENT

Ambiguous or Vague Terms

General Rule

A

Court must try to determine the what parties intended by the terms of the contractà what reasonable person would think terms mean (objective standard)

  • BUT sometimes, both parties have assigned a reasonable objective meaning to the terms that differ –> at that point, court is allowed to consider subjective intent of parties
2
Q

DISCERNING THE AGREEMENT

Ambiguous or Vague Terms

Whose meaning prevails?

R2d § 201

A
  • Where parties agree to the meaning of the term, it is interpreted according to that meaning, even if reasonable person would not give term that meaning
  • Where one party knows/has reason to know that other party has attached a different meaning to the term and the innocent party is unaware of the difference in meaning
    • Meaning attached to the term by the innocent party applies
    • Unless objective meaning of the term is relatively clear
3
Q

DISCERNING THE AGREEMENT

Ambiguous or Vague Terms

Where both parties assign reasonable meaning to terms of contract and neither party is aware of the difference in meaning, _______________.

A

Rule: Where both parties assign reasonable meaning to terms of contract and neither party is aware of the difference in meaning, the contract is unenforceable.

  • “There is no sensible way to choose”
  • But sometimes, objective measures can pick a winner…
4
Q

DISCERNING THE AGREEMENT

Ambiguous or Vague Terms

A

Objective Measures for Interpretation of Term

Analyze from Specific to General (6)

  1. Contract Terms
  2. Course of Dealing (Prior relationship)
  3. Course of Performance (This contract)
  4. Trade/Industry Practice
  5. Government Regulations
  6. Dictionary

Exception: If one party is new to the industry, court won’t automatically use industry definition against them…may only be used if:

  1. Party was aware of the industry standard, OR
  2. Standard was so generally known that party should have been aware of the definition