Hi. Thanks in advance for helping.
I have a partnership agreement in front of me and I have to determine whether there is a valid enforceable contract. There are signatures by 6 parties (I am assuming they are of legal capacity) signaling acceptance of an offer and the purpose of the contract at issue is legal.
However, section 6, which deals with the apportionment of losses, cites: "Rich partners shall bear 60% of net losses sustained by the venture and poor partners shall bear 40% of such losses."
My question is:
If the offer contains ambiguous terms in a significantly important section of the offer, is there a formation of a contract (even if there are signatures and no dispute) or does this simply make the contract voidable?
Please help as I cannot seem to find any direct answer. PLEASE.
These sites make it clear that ambiguous language does not automatically void a contract.
http://www.reddeeraltalaw.com/articles/ContractLaw.htm
http://www.abanet.org/buslaw/blt/bltaug01_weiner.html
Ms. Sue,
Not to discredit your answer, which I do appreciate, but I am still confused.
I understand that in order for a contract to be valid, an offer must be: (i) an expression of promise, undertaking, or commitment to enter into a contract; (ii) definite and certain in its terms; and (iii) communicated to the oferee.
Also, in your first link I read this:
With the clause taken out, the contract may have no meaning and therefore the contract would be void.
I am still confused. Please elaborate.
To determine whether an offer containing ambiguous terms in a significant section of the contract would still create a valid enforceable contract, you need to consider the basic principles of contract law. Here's how you can approach this and find the answer:
1. Identify the elements of a valid contract: For a contract to be enforceable, several key elements must be present. These typically include offer and acceptance, consideration, intention to create legal relations, capacity of the parties, and lawful purpose.
2. Assess offer and acceptance: Based on your statement, it seems that there has been an offer from one party and acceptance by the other parties through their signatures. This suggests that the first requirement of a valid contract, offer and acceptance, has been met.
3. Determine the significance of the ambiguous term: Ambiguity in a contract term could potentially create uncertainty and disagreement between the parties. In this case, section 6 of the partnership agreement deals with the apportionment of losses, and it contains an ambiguous term regarding how the losses will be distributed among the partners.
4. Consider the effect of ambiguous terms: When a contract contains ambiguous terms, it may impact the parties' understanding of their rights and obligations. However, not every ambiguous term automatically renders a contract invalid.
5. Assess the importance of the ambiguous section: To determine whether the ambiguity in section 6 is significantly important, consider whether it goes to the heart of the agreement or affects a fundamental aspect of the contract. If it does, the contract's enforceability may be affected.
6. Evaluate the potential impact on the formation of a contract: While unclear terms can create difficulties in interpreting the contract, if the other elements of a valid contract are present (such as intention to create legal relations, capacity, and lawful purpose), the contract may still be valid and enforceable, despite the ambiguity.
7. Consider the possibility of contract voidability: If a contract contains ambiguous terms in a material section and one party can demonstrate that they entered into the contract because of a fundamental misinterpretation caused by the ambiguity, they may have grounds to argue that the contract is voidable. However, simply having ambiguous terms might not automatically render the contract voidable.
It is important to note that contract law can vary depending on jurisdiction and specific circumstances. Consulting with a legal professional familiar with contract law in your jurisdiction would provide you with the most accurate and reliable answer for your particular situation.