A Study of the Risks of Contract Ambiguity
Preston M. Torbert
University of Chicago Law School; Peking University School of Transnational Law; Baker & McKenzie
May 1, 2014
Peking University Transnational law Review, vol. 2, issue 1, 2014, pp. 1-114
University of Chicago Coase-Sandor Institute for Law & Economics Research Paper No. 686
The article attempts to answer the question: What are the risks of ambiguity in contract drafting? It chooses one negotiated contract from the SEC's EDGAR database and performs a vey detailed ambiguity analysis of that contract. It finds that contract drafting has three ambiguity-related risks: the risk of an unanticipated event after the contract has become effective, the risk that a relevant provision in the contract will be found ambiguous, and the risk that the presumption of contra proferentem will apply to the interpretation of the ambiguous provision. The article is one practitioner's attempt to combine theory with practice and to appeal to practitioners, scholars, and judges who work with contracts.
Number of Pages in PDF File: 120
Keywords: contracts, ambiguity, risk, contra proferentem, EDGAR, ejusdem generis, noscitur a sociis, reverse ejusdem generis, expressio unius
JEL Classification: K12
Date posted: May 3, 2014 ; Last revised: May 17, 2014
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