One of the tasks of the contract draftsman is to try to avoid using words and phrases that could have more than one meaning. Here are a few expressions (only some of which regularly feature in contracts) that could mean the opposite of one another, depending on the context:
- To the Licensor’s knowledge, the moon is made of cheese… This is usually intended to mean “as far as the Licensor is aware”, but it could conceivably be interpreted as a statement that the Licensor has personal knowledge that enables him to assert positively the composition of the moon. We prefer to use the “as far as aware” formula, as it does not have this potential ambiguity. (There is a separate question as to whether such a warranty implies any duty to check or do searches, but that is a different issue.)
- Completion. In contracts, completion often refers to an event where formal documents are signed to give effect to a transaction, ie at the start of the transaction. The US equivalent of this is “closing”. However, completion of a contract could refer to when the work to be performed under a contract has been completed, ie at the end of the contract. We have encountered clients who have used the word with this sense. Where the word is used in a contract, it is prudent to check that there is no ambiguity in context.
- Sanction. This can mean “permit” or “prohibit”.
- Oversight. This can mean “supervision” or “mistake”.
- Screen. This can mean “hide from view” or “show”.
- Fabulous. This can mean “wonderful” or “unbelievable”.
More examples of auto-antonyms, as they are called, can be found here.
This is not the only type of ambiguity that can arise in contracts, but it is often the most striking to the reader.