When Your New York Contract Is Unclear April 11, 2010

Somewhat surprisingly, in the majority of breach of contract cases I get called about, the contract does not clearly address – and sometimes does not even discuss at all – the issue that led to the claim or how it is supposed to be handled.

The next question, therefore, follows logically: how do New York’s courts treat contracts whose terms are vague or ambiguous? The answer, fortunately, is actually rather clear:

“[I]n cases of doubt or ambiguity, a contract must be construed most strongly against the party who prepared it, and favorably to a party who had no voice in the selection of its language…” Jacobson v. Sassower, 66 NY2d 991, 993 (1985); see also William A. White/Tishman East, Inc. v. Banko, 171 AD2d 401, 402 (1st Dept) (“any ambiguit[y] in an agreement [is] to be interpreted ‘most strongly against the draftsman’ as long as the particular interpretation would not lead to an absurd result…”) (bracketed matter added), app. den. 78 NY2d 857 (1991).

The reason for this rule is also fairly obvious: the one who is drafting the contract is presumably weighting the contract to inure in his favor – and heavily. A prime example of this is in the real estate context, where the seller is using pre-printed boilerplate forms that place nearly every potential burden on the purchaser or renter.

In addition, as is often the case, the one who has drafted the contract (such as the seller in the real estate context), is in a stronger bargaining position, and a distinct advantage. (Another example is in the employer-employee context. For additional information on this topic, see “Commission Agreements: 4 Myths That Can Needlessly Expose Your Small Business to Legal Claims“). Consequently, in order to level the playing field somewhat, if the drafter of the contract didn’t put it in the contract in a clear fashion, it will be presumed that they did not want it in the contract.

Jonathan Cooper is a New York Business Litigation and New York Commercial Litigation Lawyer with a focus on New York breach of contract and New York business fraud claims before the Nassau, Queens, Brooklyn, Bronx, Westchester and Suffolk County courts of New York State. For more information, feel free to contact his Long Island office at 516-791-5700.

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