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Word Games

Beware of ambiguous language in your contracts, and you'll avoid the headache of court battles.

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This story appears in the June 2003 issue of Entrepreneur. Subscribe »

Owners of Carvel Ice Cream franchises in East Coast states were shocked when they discovered their franchisor, Carvel Corp. of Farmington, Connecticut, had started selling its ice cream in supermarkets at prices that undercut the franchise stores. They thought their contracts gave them protected territories. But when they hired attorneys to look into those contracts, they discovered the wording was ambiguous.

For instance, some contracts guaranteed the company would not establish other Carvel stores within a quarter mile of a Carvel franchise. But did a supermarket count as a Carvel store? A U.S. District Court judge ruled that because the contracts were ambiguous, it would be up to a jury to determine the intent of the company in drafting the contracts and the expectations of the franchisees who signed them.

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