The doctrine of contra proferentem, which is Latin for “against the offeror,” promotes an essential legal concept: fairness. The doctrine applies when the interpretation of a contract or contractual provision is at issue. In practice, any ambiguities in a contract and its terms will be resolved contra proferentem, against the party who prepared or presented the contract or its term. Axiomatically, the interpretation will thus be favorable to the party who did not prepare the contract or present the terms or language at issue.
The Courts will call upon this doctrine only when all possible interpretations of the contract and its language have first been considered. After that, should an ambiguity remain, the Courts can invoke this doctrine, strictly construing the contract in the light most favorable to the non-drafting party. Thus, if the contract is otherwise deemed unambiguous, this doctrine would not apply.
How does this affect you, as a consumer or party to a contract? First, it is always crucial to review contracts thoroughly, and if they are unclear to you, refer them to trusted counsel for review and consultation. Second, you enter more contracts as a consumer and business owner than you may realize – whether it is for a new insurance policy, a new car purchase, or even your cell phone carrier service. Contracts are all around us, and when the bargaining power is titled in favor of the provider over the consumer, the scrutiny is often heightened. Yet, if the terms used are reasonable and can be unambiguously construed, it does not matter if the insurance company or service provider has a team of legal counsel versus just you, the consumer or business owner. The Courts will not employ this doctrine haphazardly and without cause.
Finally, as counsel to many business owners and property owners who resolve disputes by settlements, the doctrine of contra proferentem often arises in the preparation of a settlement agreement. Through explicit contract terms, the parties can agree that this doctrine shall not be applied and that the parties were both actively involved in the negotiation of the settlement agreement. Thus, the terms would be interpreted as written and most reasonably should there be a dispute later.
If you are a business owner or service provider who is concerned about your contracts and whether they protect your interests in the event of a dispute over the terms and the language employed, you should consult with an attorney to ensure that the language you are employing is the best for you and your business interests.
Disclaimer: The information contained in this post is not, nor is it intended to be, legal advice. You should consult an attorney for advice regarding your individual situation. We invite you to contact us and welcome your calls and communications. Contacting us, however, does not create an attorney-client relationship.