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