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A Study of the Risks of Contract Ambiguity

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

120 Pages Posted: 3 May 2014 Last revised: 17 May 2014

Preston M. Torbert

University of Chicago Law School; Peking University School of Transnational Law; Baker & McKenzie

Date Written: May 1, 2014

Abstract

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.

Keywords: contracts, ambiguity, risk, contra proferentem, EDGAR, ejusdem generis, noscitur a sociis, reverse ejusdem generis, expressio unius

JEL Classification: K12

Suggested Citation

Torbert, Preston M., A Study of the Risks of Contract Ambiguity (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. Available at SSRN: https://ssrn.com/abstract=2431815 or http://dx.doi.org/10.2139/ssrn.2431815

Preston M. Torbert (Contact Author)

University of Chicago Law School ( email )

1111 E. 60th St.
Chicago, IL 60637
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(312) 861-8179 (Phone)

Peking University School of Transnational Law ( email )

University Town,
Xili, Nanshan District
Shenzhen, Guangdong 518055
China

Baker & McKenzie ( email )

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Suite 5000
Chicago, IL 60601-6225
United States
(312) 861-8179 (Phone)

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