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What Happens When Your Agreement is Unclear in New York


In the last few years, I've been surprised to see how otherwise reserved people seem so emboldened when discussing provisions of their agreement, and proclaiming that a particular clause is "ambiguous" or "unclear" and therefore unenforceable under New York law.

Not surprisingly, these people are often wrong.

In the first instance, the question of whether a particular provision in a contract is - or isn't - ambiguous is for the court to decide.

As one New York Federal court recently put it, "Under New York law, whether a written contract is ambiguous calls for a legal determination. Diesel Props S.R.L. v. Greystone Bus. Credit II LLC, 631 F.3d 42, 51 (2d Cir. 2011). "Ambiguous language is that which suggests 'more than one meaning when viewed objectively by a reasonably intelligent person who has examined the context of the entire integrated agreement and who is cognizant of the customs, practices, usages and terminology as generally understood in the particular trade or business.' " E.R. Squibb & Sons, Inc. v. Lloyd's & Cos., 241 F.3d 154, 174 (2d Cir. 2001) (quoting Lightfoot v. Union Carbide Corp., 110 F.3d 898, 906 (2d Cir.1997)).

Once the Court determines that a particular contract or clause contained within the contract is ambiguous, however, it then becomes a question for the trier of facts in the case - whether a jury or a judge - to determine what that clause means under the totality of the circumstances. Scholastic, Inc. v. Harris, 259 F.3d 73, 82 (2d Cir. 2001) (citing Revson v. Cinque & Cinque, P.C., 221 F.3d 59, 66 (2d Cir.2000)).