CASUAL LEGAL: The Longstanding Rule to Address Ambiguity in Contracts

The Longstanding Rule to Address Ambiguity in Contracts

By James McTague

Reynolds Mirth Richards Farmer LLP

AMSC Casual Legal Service Provider

 

Contracts are often the result of extensive negotiations. Each party seeks to have the contract drafted in such a way that it favours their own interests. The consequence of this process can often be that some contractual provisions are unclear or ambiguous, which can result in parties to the contract interpreting provisions differently.

The contra proferentum rule is a longstanding legal doctrine that addresses how a court will interpret ambiguity in a contract. The latin phrase contra proferentum translates to ‘against the offeror’. The rule provides that any ambiguity in a contractual provision shall be interpreted against the interests of the party who drafted or introduced the provision.

The underling basis for the rule is that if a party sought to include an ambiguous or vague provision in the contract that results in their own favour, the benefit they receive from this act should be limited by having the ambiguity interpreted in a matter that is favourable to the party who did not include the provision – the innocent party.

When courts are applying this rule, they will first consider whether the language of the contract is sufficiently ambiguous to be unclear or uncertain. If it is determined that the language is sufficiently ambiguous, they will attempt to determine what the true intention of the parties was when the contract was established. Courts will consider available evidence to assist in determining the true intention of the parties. If the evidence does not clarify the true intention of the parties, courts will apply the rule and interpret the ambiguity or unclear provision in a way that is favourable to the party who did not draft the provision – the innocent party.

The rule is still commonly applied to address ambiguity. As municipalities often draft various contracts and agreements, it is critical to ensure that the contract is clear and unambiguous to avoid having any ambiguity interpreted in a manner that is unfavorable to the municipality. Further, clear contractual language can be sufficient to contract out of the rule by confirming that the contract was prepared mutually and no ambiguity should be interpreted against the drafter.


To access AMSC’s Casual Legal Helpline, AUMA members can call toll-free to 1-800-661-7673 or email casuallegal [at] amsc.ca and reach the municipal legal experts at Reynolds Mirth Richards and Farmer LLP. For more information on the Casual Legal Service, please contact riskcontrol [at] auma.ca, or call 310-AUMA (2862) to speak to AUMA’s Risk Management staff. Any Regular or Associate member of the AUMA can access the Casual Legal Service.

DISCLAIMER: This article is meant to provide information only and is not intended to provide legal advice. You should seek the advice of legal counsel to address your specific set of circumstances. Although every effort has been made to provide current and accurate information, changes to the law may cause the information in this article to be outdated.