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Showing posts from November 26, 2017

The BUSKLAW December Newsletter: Resolving the "Mental Mist" of an Ambiguous Contract

(Author's Note: Props to Kilroy J. Oldster for coining the term "mental mist.")

Contractual ambiguity - usually created when two provisions of the same contract irreconcilably conflict with each other - isn't pretty. At best, it's embarrassing to the lawyer who drafted the document; at worst, it thwarts the business purpose of the contract and may lead to litigation.

A typical case of contractual ambiguity results when a contract incorporates another document in the text that conflicts with one or more provisions. This scenario played out in Klapp v United Insurance Group Agency, a 2003 Michigan Supreme Court case. The decision prescribes how a Michigan court should resolve contractual ambiguity.

Craig Klapp was an insurance agent for United Insurance from 1990 to 1997. In 1990, he signed an "Agent's Agreement" that included a Vesting Schedule stating that on his retirement at an unspecified age and provided that he had worked at least two years for U…