Business contracts are meant to give everyone a clear understanding of what is expected. However, when a deal doesn’t go as planned, the language in the contract may not always be able to provide a clear answer.
Disagreements can arise when each side believes the contract means something different. What may have seemed like minor details when the contract was first signed can become an important issue once the parties no longer see things the same way.
When contract language leaves room for disagreement
Unclear contract language can create uncertainty about what each party is required to do. A contract may explain the basic terms of a business relationship but fail to address what happens if a deadline is missed, circumstances change or one party does not fulfill its obligations. When the wording can reasonably be understood in different ways, the parties may end up with conflicting interpretations and confusion about what comes next.
When the parties disagree about how a contract should be interpreted, the dispute may lead to court. Courts generally look at the contract as a whole when determining what the parties may have initially intended.
The meaning of one provision may depend on the language surrounding it, particularly when different parts of the agreement appear to conflict. If one party fails to follow the terms of the contract, the dispute may also become a breach of contract claim. Depending on the circumstances, the non-breaching party may seek monetary damages for losses caused by the breach. In some situations, a court may instead order the breaching party to fulfill its obligations under the agreement, particularly when financial compensation would not be enough to address the harm.
Other remedies may also be available depending on the agreement and circumstances of the dispute. A court may, for example, allow a contract to be terminated and require one party to return money or other benefits it received. Rescission may also be appropriate in certain cases, ending the agreement and releasing the parties from future contractual obligations. The remedy available will depend on the nature of the contract, the breach and the losses involved.
When a business contract leaves important questions unanswered, a disagreement can become much more complicated than either side ever expected. Speaking with a qualified legal professional can help a business understand how the contract may be interpreted, what remedies may be available and how to move forward with the dispute.
