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Why is contractual interpretation so important to an agreement?

When a Moorestown business person schedules a meeting, the person probably makes note of the time, place and reason for holding the conference. People do this so they can be prepared for the event and to ensure that they are not late or in the wrong place. Recording the details of the planned get-together takes ambiguity out of the rationale for and particulars about the business interaction.

Ambiguity presents challenges in many areas of business because when it pops up it can mean that a party or parties did not fully develop the details of an aspect of business. For example, an ambiguous contract can be the start of big problems for the parties who sign their names to it. This is because an ambiguous contract is one that in full or in part can be read different ways to signify different requirements for achieving the responsibilities of the agreement.

Consider a contract that in part reads, "Party A will deliver the goods to Party B on Monday." This may seem like a clear contractual term. But what if Party A thought they agreed to delivery on a Monday next month while Party B thought they agreed to delivery on Monday of next week? This small oversight to include the specific delivery date could cause major problems for Parties A and B.

In the scenario mentioned above, the failure to provide specific contractual details about the goods' delivery may result in a contractual dispute between the parties. Contractual disputes that do not resolve on their own often turn into litigation based on contract disagreements. As prior posts on this blog have discussed, litigation can be a costly and time-consuming process for a Moorestown business person.

How the parties to an agreement interpret it has a lot to do with the level of ambiguity present in the contract. Avoiding ambiguity can prevent many contractual interpretation problems from cropping up. To create unambiguous, clear contracts, consider seeking the guidance of a business and contracts attorney to help with the important work of drafting business agreements.

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