“The Mom and Pop Store” – Ambiguous Contracts

(We will be using “John” when referring to the periodontist and “Jon” when referring to the actor. Interestingly, the unofficial script of the episode does this as well.)

In order to convince George to buy a LeBaron convertible, a car salesmen tells George that the vehicle once belonged to John Voight. Wanting to own a car that once belonged to actor Jon Voight, George purchases the car. Later though, he discovers that the car actually belonged to the periodontist John Voight, not the actor! Does George have any legal rights to return the car and get a full refund? Did the care salesmen do something wrong by saying that the car once belonged to John Voight?

When an ambiguous term is used in a contract, in this case the words “John/Jon Voight,”  courts use a number of different tools of interpretation to establish the legal meaning of the word or term. These tools, among others, include the parol evidence rule (which we discussed in “The Soup,”) common usage, reasonableness, prior dealings, or the implied meaning. These different devices allow a court to determine the meaning of a word or term by looking to how the parties had used such a term in the past, how society typically uses the word, or how the parties had used the term in conversations or other writings outside of what was actually written in the contract. So, for instance, if George had said directly to the salesmen something akin to “like the actor,” and the salesman responded affirmatively, then a court would likely determine that George clearly thought he was buying the actor’s old car. The court would then almost certainly rule that George could return the car and get his money back. The general rule is that the objective usage of the term will triumph over the subjective interpretation, unless the drafting party had some reason to believe that the other party was interpreting the word differently. 

Did you get the Volvo?

The problem here is that we don’t know very much about the conversation between George and the salesman, other than that the salesman said that the car belonged to John Voight. Even though George certainly thinks he is getting the actor Jon Voight’s car, he never clarifies it with the salesman. An additional problem for George could be the principle of reasonableness, as a court may consider George’s expectation that Jon Voight’s old car was just sitting in a used car lot to be unreasonable. A court may also consider the fact that had George simply looked inside the glove compartment he would have found the owner’s manual where Voight’s name is clearly spelled like the periodontist’s name. Since George didn’t bother to verify to whom the car once belonged, a court may find against George.  

They conned us, and they scored bigtime.

However, George’s best argument would be the contractual principle of Contra Proferentem. This doctrine of contractual interpretation calls for a court to interpret a contractual ambiguity against the interests of the party that drafted the contract. The reasoning for this is that the drafting party has the power and autonomy in crafting the contract, and the court does not want to encourage parties with that kind of power to draft contracts that take advantage of the other party.

Given this, it is likely that a court would determine that the salesman should return to George his money. Although it was not written explicitly in the contract that the car once belonged to the actor Voight, the salesman made a direct representation that the car once belong to Jon Voight, and had to have known that George would believe this Voight to be the actor, not the periodontist. Even though the salesmen did not directly state that it belonged to the actor, it was not outlandish for George to think it was the actor Jon Voight the salesmen was referring to. Otherwise, why point it out at all?

Therefore, a court may in fact determine by this principle that the contract should be interpreted against the salesmen, and that George could return the car.

And that's just the tip of the iceberg.

A final issue to consider is what would happen had the John/Jon Voight ambiguity actually been written down in a contract. The confusion comes because the two names sound the same. But had the salesmen actually written down in the contract that he was selling John Voight’s car, and spelled the name like the periodontist, could George still argue that there was some confusion? It would be much harder for George to make such an argument in that situation, especially since he clearly knows that the actor does not include an “h” in his name.

Ultimately this is going to be a fact finding endeavor for the court, and it’s not necessarily clear cut either way. Except for whether Jon Voight bit Kramer. That much is clear.

At least from his pencil.

Watch... Watch the arm.

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