We know that language is not usually clear. Words convey information but not always the information that the speaker or writer intends. Ambiguity characterizes those words and phrases that do not have...

We know that language is not usually clear. Words convey information but not always the information that the speaker or writer intends. Ambiguity characterizes those words and phrases that do not have a clear meaning. These ambiguous terms might result in another person’s misinterpreting what the writer or speaker actually meant. In contract law, ambiguity could create problems between an offeror and offeree, as the two parties might not be in agreement on the same terms of the contract if the contract contains ambiguous language. In Case 10-4, the parties thought they understood each other. Key ambiguous phrases, however, created confusion in the contract negotiations and, consequently, raised concerns about whether there was actual consent by both parties. As business managers, it is imperative that you demand clear definitions in the contracts that you offer and accept. The following questions pertaining to Case 10-4 prompt you to consider the importance of ambiguity in contract law.

1. What key ambiguous phrases did the court discuss? Clue: Find the legal term in dispute that the judge defined. Also, look for ambiguity in the specific elements of the contractual negotiations between the plaintiff and the defendant.

2. How did the ambiguity in the alleged contract affect the court’s reasoning? Clue: Do you think the court would have ruled differently in Case 10-4 had the ambiguity not existed?