A judge must interpret a contract when the parties do not agree on the meaning of its terms. The judge will follow certain established contract interpretation rules.
An ambiguity exists when the words of a contract are subject to two or more reasonable interpretations. The rule of Contra Proferentum puts the risk of ambiguity, lack of clarity, and absence of warning on the drafting party such that if the contract interpretation rules do not resolve the ambiguity, then the ambiguity will be construed against the drafter.
For a contractor to recover under the rule of Contra Proferentum,
- The contractor’s interpretation must be reasonable;
- The opposing party must be the drafter;
- The non-drafting party (the contractor) must have relied on its interpretation in submitting its bid; and
- The ambiguity must not have been so patent or glaring that the contractor should have sought out clarification prior to submitting its bid.