How Does the Court Interpret an Ambiguous Contract? The Art of Figuring Out What the Parties Intended. (Since they don't agree!)
When a contract is ambiguous - and to some extent all contracts are ambiguous or at least inconsistent - how does a court resolve a dispute? Sometimes a contract expresses inconsistent obligations, or - and I think more commonly - the issue is what the parties intended by the use of a particular term. But the ambiguity only rarely results in litigation. So what happens when the parties can't agree on the terms of the contract?
The law of contracts covers just such a situation. Contract interpretation is a question of law. That means that the court (judge) decides what the terms of the contract mean. Whether or not a party breached a contract is a question of fact - and that is the province of the fact finder: the jury - or the judge if there is a bench trial.I recently posted on this blog a comment about a case where the issue was what the parties meant by the term, "cohabit." The term "cohabit" does not in and of itself usually lead to confusion; in this case one party argued that "cohabit" meant that the parties living in the same residence must have a sexual relationship before the cohabit provision would apply.
Adams Drafting has a very interesting article about the use of experts when contract terms are ambiguous. Clearly an expert can not testify as to what the parties intended. But, an expert can testify as to the meaning of certain words or phrases. An expert can not testify as to whether a contract is ambiguous, but can testify as to the technical meaning of the language.
I think that Adams is correct. Some language is not ambiguous on its face. yet the parties could have very different interpretations of the contract: i.e. "cohabit."
