Contract interpretation is a problem in some cases. When what you believe a contract means isn’t what the other party thinks it means, you can end up with trouble.
The good news is that you have options to reduce the likelihood of contract disputes and issues with interpretation by making sure your contract uses unambiguous wording and reflects commercial business sense.
How can you avoid contractual misunderstandings?
There are steps you can take to avoid disputes over misunderstandings. With any contract that you work with, you should be sure that the items you want to communicate are clear. This is the argument against using dense legalese in a contract. You want to know that the other party understands the contract just as well as you do.
When you write up a contract or work with one with your attorney, review it and ask yourself if there are any ways in which it could be misunderstood. For example, noting that a payment is due by the end of the day on a certain date may not be clear. What is the end of the day? Do you mean the end of the business day or midnight?
When you go over the contract with the other party, you should watch out for misunderstandings when you talk, too. Oral misrepresentations of what’s written may occur, and you should make sure to correct them. For example, if the contract states that someone needs to pay their landlord before the first day of the month but you verbally say it’s due on the first, then you could have a dispute later on.
In commercial real estate, it’s in your best interests to make your contracts clear. Clarity will make it so that neither party has questions and both parties understand their responsibilities and obligations.
In the interest of clarity, you may also want to ask the other party to take the contract to their attorney and to contact yours if they have questions. That way, they’ll have time to ask questions before signing, and you can show that you took every necessary step to be sure they understood what they were signing.