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What Constitutes Vagueness In A Contract?

On Behalf of | Jul 4, 2023 | BUSINESS & COMMERCIAL LAW - Contract Disputes

Contracts are crucial in business. They highlight what is expected of involved parties, help operations run smoothly, encourage confidentiality and reduce disputes. However, an agreement may not offer these benefits if it lacks crucial qualities, including clarity.

Here are three things that can make a contract vague:

1. Vague terms

Unspecified terms, such as reasonable expenses, standard quality, good performance, undue delay, satisfactory, substantial or prompt, can make a contract vague. You should specify every detail in your agreements.

For instance, if you need a supplier to deliver goods within three days, state so. Using “as soon as possible or prompt” may lead to misunderstandings.

Words with more than one meaning

If your contract has words that can be interpreted differently, you should include the intended definitions, possibly at the beginning. This way, any reasonable person can understand the terms.

Conflicting terms

The details in your contract should be in sync. It can be confusing to have contradicting terms. For instance, if you have stated a supplier should deliver goods within three days, this information should not change at any point in the agreement.

How to handle a contract dispute regarding vagueness

If you are in a dispute stemming from vagueness, employ the conflict resolution methods in the agreement. However, if you don’t get the expected outcome or the issue is major, you may need to involve the court to determine the intended meaning.

The court may consider different principles, including:

  • The plain meaning of terms (dictionary meanings)
  • Interpretation of the contract by a reasonable person with knowledge of context
  • The purpose of the contract as a whole and the particular clause

If the contract is significantly ambiguous, the court may rely on external evidence to interpret it.

Vagueness can lead to costly contract disputes. It may be best to get legal guidance when drafting agreements to avoid such hitches.