Conscious Ambiguity: Slaying Cerberus in the Interpretation of Contractual Inconsistencies
47 Pages Posted: 28 Aug 2009 Last revised: 6 Sep 2011
Date Written: 2009
In United Rentals, Inc. v. RAM Holdings, Inc., Vice Chancellor Chandler rejected conscious ambiguity as a drafting principle. In the face of seemingly inconsistent provisions in the merger agreement between United Rentals and Cerberus, Vice Chancellor Chandler denied United Rentals specific performance because the equipment lessor knew that Cerberus did not think there was a specific performance remedy in the agreement and, therefore, United Rentals was not a forthright negotiator. But underlying the opinion was a message to lawyers that they have a professional and ethical obligation to draft contracts clearly. “Conscious ambiguity” undermines those obligations and is inconsistent with a consent theory of contract. This Article ends by calling for more empirical study of the ethical obligations of lawyers in drafting contracts.
Keywords: Cerberus, United Rentals, RAM Holdings, Conscious Ambiguity. Contract Drafting, Contra Proferentem, Four Corners Rule. Drafting Ethics, Contractual Inconsistencies, Contract Interpretation
Suggested Citation: Suggested Citation