What Happens When a Contract is Unclear?

By Jedidah McKeehan

Lots of what attorneys do involves drafting, interpreting, and arguing over provisions in contracts.  Attorneys get a bad rap in this area of the law because people feel that once attorneys become involved contracts become overly complicated and complex and they turn from one page documents to fifteen page documents.

I cannot really argue with that point because my wife and I own some rental properties and our lease keeps getting longer and longer.  Every time we run in to an issue I think, “I am never going to have this issue again, I will address it in our lease in case it comes up again.”

Almost all attorneys are this way.  Whether it is a parenting plan, a lease, or a contract to purchase a car, attorneys are obsessive about trying to account for every possible contingency or situation that might come up.  Why is that?  Well, often we have people come to us who are owed money by someone and they will not have a single piece of paper proving that they are owed anything.

So, you can see why attorneys draft contracts that are lengthy and meticulous.  We do not want any situation to come up that is not addressed in the contract.

But what happens if a contract is unclear as to how it should be interpreted?  For example, what if a non-compete agreement says, “You cannot open a business within 25 miles of your former employer.”  Okay, so does that mean via roads or “as the crow flies” meaning, a straight line?

Well, the contract does not say, so we have an unclear term that is up for interpretation, disagreement, and discussion.  What do the courts do with this?

Tennessee law addresses this situation specifically (because it happens quite a bit), and states that if a contract term is ambiguous, then the court will interpret the contract in favor of the person who did not draft it.  Kind of awkward terminology there, but that means that if you are the one who drafted a contract, and something can be interpreted two different ways, then they will interpret it against you.  Why is this?  The court’s rationale is, “Look, you drafted this, you had the opportunity to be as clear as you wanted to be in this contract and you were not.  Therefore, we are interpreting the contract the way the other party wants it interpreted.”

So in our above scenario, when a contract is silent as to how the distance is to be calculated, then the person who did not draft the agreement will be able to prevail on their position.

This is a simple example of why attorneys are OCD about contracts.  They do not want any situation or term to be left open for interpretation.  They want everything to be crystal clear in the contract what the terms are and what the ramifications are if someone does not comply with those terms.

 

Jedidiah McKeehan is an attorney practicing in Knox County and surrounding counties.  He works in many areas, including criminal, divorce, custody, personal injury, landlord-tenant, civil litigation and estate planning. Visit attorney-knoxville.com for more information about this legal issue and other legal issues.

You must be logged in to post a comment Login