As a business person, you’re likely familiar with ambiguity in contracts. Ambiguity is when words can have more than one meaning, and this can lead to contentious disagreement and disputes. One type of ambiguity you may not be as aware of is latent ambiguity. Latent ambiguity is an ambiguity in a contract that is not obvious and can be discovered when there is more than one possible interpretation of the language used.
What Causes Latent Ambiguity?
Latent ambiguity occurs when words used in a contract are ambiguous or unclear and can be interpreted in more than one way. This type of ambiguity usually arises when a contract fails to make an adequate and definite assertion, such as when a contract specifies a vague or ambiguous description. Another common cause of latent ambiguity is when a contract includes language that is outdated or otherwise unfamiliar, adding a potential for misunderstanding.
Impacts of Latent Ambiguity
Latent ambiguity can have significant implications on contracts. It can cause disagreements between parties concerning the obligations of the contract, the legal effect of its provisions, and the rights available to either party. In some cases, it may even make a contract invalid if it is not clear which party is entitled to what. As a result, latent ambiguity can be a major obstacle to fulfilling contract obligations.
How to Minimize Latent Ambiguity
The best way to minimize the effect of latent ambiguity is to make sure contracts are as clear and unambiguous as possible. This means drafting a contract with language that is understandable by all parties and avoiding overly formal or outdated language. Additionally, it’s important to be precise and clear when referencing other documents, such as other contracts, to avoid creating confusion. Finally, it’s important to review the contract carefully to make sure there are no areas where two parties could interpret the language in different ways.
Conclusion
Latent ambiguity can be a tricky issue to navigate in contracts. While it can be difficult to eliminate completely, taking proactive steps to make contracts as clear and unambiguous as possible can help minimize the potential for latent ambiguity and better ensure successful contract fulfillment.