This is a subscriber-only article. Join Entrepreneur+ today for access

Learn More

Already have an account?

Sign in
Entrepreneur Plus - Short White
For Subscribers

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

By Steven C. Bahls

Opinions expressed by Entrepreneur contributors are their own.

Owners of Carvel Ice Cream franchises in East Coast states wereshocked when they discovered their franchisor, Carvel Corp. ofFarmington, Connecticut, had started selling its ice cream insupermarkets at prices that undercut the franchise stores. Theythought their contracts gave them protected territories. But whenthey hired attorneys to look into those contracts, they discoveredthe wording was ambiguous.

For instance, some contracts guaranteed the company would notestablish other Carvel stores within a quarter mile of a Carvelfranchise. But did a supermarket count as a Carvel store? A U.S.District Court judge ruled that because the contracts wereambiguous, it would be up to a jury to determine the intent of thecompany in drafting the contracts and the expectations of thefranchisees who signed them.

Ambiguous language in contracts is a common problem, says GreggWeiner, an attorney with Fried, Frank, Harris, Shriver and Jacobson in New YorkCity. Courts have not established a standard for determiningwhether contract language is ambiguous or clear. Generallyspeaking, he says, the question is whether the language isobjectively susceptible to more than one meaning. But appellatecourts have overturned trial courts, disagreeing over whether aparticular contract is ambiguous.

The rest of this article is locked.

Join Entrepreneur+ today for access.

Subscribe Now

Already have an account? Sign In