Multiple meanings in a contract refers to instances where one word or term may have more than one definition or interpretation. For instance, the word “nut” may mean a type of food, as in “peanut” or “walnut.” Or, it could refer to the building tool as in "nuts and bolts." Thus, a shipment for a “case of nuts” may have different meanings depending on the context.
Terms that have multiple meanings can therefore cause disputes and misunderstandings in a contract. Imagine placing an order for peanuts, only to receive a shipment of nuts and bolts! This is why it’s so important for contract drafting to be clear and unambiguous, especially when it comes to technical trade terms.
In the event that a contract terms is misunderstood, the legal analysis for contract interpretation is similar to when there is a mistake in the contract. First, it depends on what knowledge of the term that each party has:
With regards to the last situation, the reasoning is that the non-misunderstood party might take advantage of the other party based on their error.
Any time a party to a contract has any doubt about a contract term, they should clarify the term with the other party before proceeding. If they’re still unsure, they may wish to contact a professional for advice.
Contract interpretation can often be a very complicated procedure. This is because contract laws can be complex, and contracts themselves are very detailed documents. You may wish to hire a lawyer if you need help interpreting a term in a contract. Your attorney can explain your options and can also provide representation in court if needed. You can also hire an attorney early on if you need help negotiating or drafting up a contract.
Last Modified: 11-21-2013 04:37 PM PSTLaw Library Disclaimer
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