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Creation of a Clear and Unambiguous Representation
Creation of a Clear and Unambiguous Representation
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Introduction
In law, a misrepresentation normally occurs when there are unambiguous, or false statement of facts, which may actually contribute to contracts becoming voidable. Law in its actual sense is a profession that relies mainly on the interpretation of words. Through the use of words, contracts between different parties are created, there are statutes that are enacted, and overly constitutions are implemented. However, it is important to point out that, the words that are used in documents, or are utilized by a person in a certain law setting cannot always be determined to be clear. The reason for this is that, in some instances, there are words, or phrases that can be understood in more than one way because of a sense of uncertainty, or they are prone to different interpretations by different individuals. This brings in the need for deontic logic, a field in philosophical logic concerned with permissions, obligations, and everything in between.
In a majority of scenarios whereby the differences that are brought by misunderstanding of words can contribute to the parties that are in conflict being involved in a litigation whereby, they will request the court to come up with an interpretation of the words that are being disputed. In law, when such a situation arises, a contract can be stated to contain what is referred to as ambiguity. In this paper, the researcher assessed how ambiguity and misrepresentation in law arises, and the best approaches that can be undertaken to resolve them. The researcher used different court cases to indicate the development of a clear and unambiguous representation.
Deontic Logic
In law, deontic logic is an entire branch dedicated to studying the normative concepts relating to obligations, permissions, prohibitions, and other related concepts. For example, statements or phrases containing words such as “ought”, “may”, “may not”, “optional,” “bad,” “claim,” “good,” “power,” “immunity,” “supererogatory,”” liberty,” and words involving “blameworthy,” or “praiseworthy.” The role of this branch in the legal system is to look keenly at the use of language, whether in contracts, agreements, or any forms of legally binding engagements. It looks at what follows from a certain use of words and the expectations therein. It aims to address what supports what. It is a creation of modal logic, the idea of possibility and necessity. Deontic logic usually directly involves topics and subjects of substantial practical implication such as the law, expectations on morality, business and social organizations (the norms, and the normative constitutions), and even security systems.
The Aspect of Ambiguity in Contract Law
When there is ambiguity in a contract law, it can result in what is known as a void, or voidable contract. This is mainly dependent on the type of ambiguous language that is identified in an agreement. For instance, a contract is determined to be ambiguous if there is an issue in relation to the language that has been used such as a specific word, term, or phrase, which can be subjected to more than one interpretation by the different parties that are involved in a contract. In addition to that, ambiguity can be observed in the event that one of the parties that is involved in a contract is unclear as to what is expected of them, or their actual involvement in a contract, it can contribute to the contract being determined as being ambiguous. The first step that is undertaken in such a scenario is that, the party that feels that a certain aspect of a contract is ambiguous needs to inform the other party to contribute to the resolution of the ambiguous terms. However, in the event that the two parties cannot come to an agreement among themselves, then, the aggrieved party can bring a legal contractual dispute against the other party in relation to a breach of contract.
In a majority of cases, a court will most likely require the disputing parties to rewrite the contract in order to resolve the ambiguous terms and provisions in the contract. A judge in a court setting during the process of reviewing a dispute and the materials provided will assess the following factors: common usage, parole evidence, industry usage, prior dealings, a sense of reason and the implied meanings. Common usage is in reference to conflicted meanings in words, phrases, or terms, and in a majority of cases, in court, the dictionary meaning of words is used to resolve such a dispute. The aspect of parole evidence normally is in reference to the verbal agreements that are normally made between the two parties in a contract before the signing of the written contract. It is important to point out that the verbal agreements are mainly made during the negotiation phase. In relation to industry usage, it refers to how a term can, or is normally used in a specific industry. This is common in technical contracts whereby one party may not be familiar with the definition, or actual usage of a term. The court also has to take into consideration the prior dealings, especially to determine how the involved parties have actually used a word, or term in the past. This is especially important for parties that may have entered into a similar and successful contract in the past whereby such terms were used, and did not contribute to any form of dispute.
A sense of reasonableness should be considered by the court when dealing with ambiguity cases in the court. When taking into consideration this factor, the court will take into consideration the approach that a reasonable individual will use to come up with a meaning of a term. The implied meanings can be used in contracts where there are contracts that have been left blank. However, in the event that parties intended to leave different terms to be blank, then a court will not have to change the contract. In most courts, they tend to resolve a contractual dispute against the party which ultimately drafted the contract. This means that the party that was not directly involved in the drafting process of a contract will most likely benefit from the court being in a position to intervene during the review process. The reason in most of these cases is that the court will have the presumption that the party that was involved in the drafting process of a contract had additional knowledge, and therefore a higher bargaining power as compared to the other party. This means that the party that is perceived to have a higher, or greater bargaining power may not benefit from the litigation process, which is an indication of the need for the aspect of unambiguity and clear representation.
Misrepresentation in the Contract Law
During the formulation of a contract, there are statements that can be made by one party, which will ultimately contribute to the other party getting into, or signing a contract. The aspect of misrepresentation may contribute to the other party being misled to sign a contract, which they would have otherwise not signed, and contribute to the development of legal claims, which may not have otherwise arisen. Law can be applied to misrepresentation in the following scenarios such as, during the period when a pre-contractual statement of a fact is made to a party that has an intention of entering into a contract, and, while the statement was relied upon to enter into a contract, it was determined to be false. An important point to note is that, the aspect of misrepresentation does not even need to be made by an individual who will benefit from the statement.
Representations are considered to be misrepresentations when they are determined to be false. In actual sense, there are three types of misrepresentations: the innocent misrepresentation, negligent misrepresentation and fraudulent misrepresentation. The actual meaning of a statement is interpreted based on the overall circumstances in which a misrepresentation was actually made. To put it into perspective, the circumstances will be considered in line with the actual negotiations and any form of representation that was made before the actual contract was finalized. An important point to make is that, in the event that an individual who is involved in the making of a representation realises that it is a false statement, then they are legally obligated to correct the mistake, and inform the other party. Alternatively, they are allowed to modify, or even withdraw the representation at any time before it is actually used, or relied upon during the signing up of a contract. To put it into perspective, if a statement is determined as being incorrect, then it can be considered as an actionable misrepresentation.
An innocent misrepresentation normally occurs when a pre-contractual statement that is false was made, however, the one who made, or provided the statement is not considered to be negligent when making that statement. To put it into perspective, the individual who is making the statement has to have reasonable believe that the statement that he or she made should be true. If this is proven, then the statement will be stated to have been made in such a manner that the individual can be considered to be ‘wholly innocent.’ A repeal of the law can be made in relation to innocent misrepresentation in the event that the statement that was made is now considered to be a term of a contract, the common law tests in relation to the case have been satisfied, and a contract has been performed in accordance to the Misrepresentation Act of 1967. The repeal of law can be avoided if the affected individual is entitled to an indemnity, which will contribute to them being restored to a position that they were in before the contract was formulated, or made.
Before the implementation of the Misrepresentation Act of 1967, damages in a contract could only be claimed as fraudulent misrepresentation, and not as negligent misrepresentation. In addition to that, only the remedy for rescission was available at that time. However, the Misrepresentation Act of 1967 changed this as it contributed to the availability of damages to be considered as a remedy for the negligent misrepresentation. In addition to that, a court is allowed through its discretion to refuse the provision of a remedy of rescission, and award the aspect of damages instead. However, an important point to note is that, it is upon the maker of a statement to prove that there was no negligence in the statement that was provided. In addition to that, the duty of care is normally applied, which is to say that one party has a high level of knowledge in relation to a subject matter needs to make the assumption that the other party will rely on that statement when they are entering into a contract.
Fraudulent misrepresentation normally occurs when a false statement is provided knowingly, or in the event that it is provided without the belief in its truth, or in a reckless, or careless manner even though it may be considered to be either true or false. An important point to note is that, during the process of making a reckless statement, there is no need to prove that there was an aspect of dishonesty. What is required to be proven is that, the statement was made in a manner that the one who made the statement did not care whether, or not the statement was true, or false. In addition to that, it is also worth noting that, the difference between what is considered to be fraudulent misrepresentation and negligent misrepresentation is based on the existence of fraudulent intention.
The Results of Misrepresentation
The primary solution to a misrepresentation is rescission. In this case, the two parties that may be involved in a conflict because of a misrepresentation will simply be placed in positions that they would have been if there was no contract that was developed in the first place. In actual sense, the effect, or impact of a contract will be reversed. On one hand, while there are no damages for innocent misrepresentation, there is a higher form of recovery of the damages for fraudulent misrepresentation. The reason for this that, in this case, there was the aspect of deceit that was used by the party that induced, or convinced the other party during the process of entering into a contract.
The damages for both the negligent and fraudulent misrepresentations are mainly calculated in line with the usual law of the damages. An important point to note is that, when it is coupled with rescission, the award for the damages is normally set in such a manner that will place the affected party in a position that they would have been in the event that the misrepresentation was not made in the first place. The damages are not calculated based on whether, or not the misrepresentation was true but on the probabilities of causation of loss and the remoteness of the loss.
The Creation of Clear and Unambiguous Representation
There have been different cases where there was an aspect of ambiguity between two parties that were involved in the formulation of a contract. The first case that will be assessed in this paper is that of Frigaliment Importing Co. v. B.N.S. International Sales Corp. In this case, the two parties that were involved in a contract were engaged in a dispute in terms of what constituted to the definition of a chicken. In this case, the buyer, made an order of chicken from a New York wholesale poultry seller. There were two chicken sizes that were included in the order i.e. 1 ½ -2pounds and 2 ½ – 3 pounds. However, when the shipment arrived in its destination, it was determined that all of the chicken that weighed 2 ½ -3 pounds could only be used for stewing purposes. However, the buyer wanted broilers and fryers, and this resulted in a litigation process.
There is the aspect of ambiguity in this case, which is presented in the court in relation to the actual definition of a chicken. According to the plaintiff, the definition of a chicken is a young chicken that is actually suitable for broiling and frying. However, according to the defendant. The term chicken means any bird that is of the genus, which fulfils the contract specifications in terms of weight and quality, and this is inclusive of the chicken that can be used for stewing purposes. This case was presented in front of Judge Friendly who contended that the two meanings of the chicken can be considered to be possible. In addition to that, he declared that the actual word chicken on its own without additional text is ambiguous. This resulted in the judge having to look at the contract to determine whether, or not there was additional information that could have been used to better interpret the word in this scenario.
The misunderstanding in this case resulted from the aspect of lexical ambiguity. In this case, a word is interpreted to have more than one objective and logical meaning. If the judge were to use an English dictionary to determine the meaning of the word, then he would have noticed that the two meanings of the chicken as presented by the defendant and plaintiff qualify, and therefore they are relevant to the case that was presented. Judge Friendly referred to the definition of the defendant as a broad sense in relation to the meaning of the chicken, while that which was presented by the plaintiff was determined to be a narrow sense in relation to the meaning of chicken. However, what made this form of lexical ambiguity to become even more interesting was that there is an inclusion relationship, whereby what has contributed to the meaning of the term chicken in the narrow sense aspect is also vital in the definition of chicken in the broad sense. This means that the judge could not use this to make a distinction on the meaning of the word based on the two definitions and determine who was right.
One of the theories that is frequently used, or referred to in relation to contract law is the objective theory. In this theory, there is the determination that the words that can be used in an agreement by themselves are normally enough, or sufficient in the interpretation of a contract. This means that, the court should not inquire from the involved parties what they meant when they used these words. The reason for this is that, for the contracting parties, they need to understand that in actual sense, it is the written words that are included in a contract that determine their contract, and not their intended meaning of words. In addition to that, they were the ones who were involved in making a contract and selecting the words used and not the court. This means that, even in the court setting, what will be taken into consideration is the actual meaning of the word as it is stated in the contract, and not the intended meaning, which has contributed to the plain meaning rule utilization. In a situation whereby the writing is complete, and there is no aspect of ambiguity, the court is obligated to interpret the words in relation to their ordinary meaning, and should not rely on the availability of extrinsic evidence to determine the intent of one, or the two parties. However, it is allowed for extrinsic evidence, or parol evidence to be used when a contract is deemed to be ambiguous as it was in this case, and the judge in the court setting is not in a position to arrive at an interpretation from the language that was used in the document. In such cases, the purpose of the extrinsic evidence is not to alter the contract as it is, but to help the judge during the process of its interpretation.
Another theory that is used in relation to interpreting words that are ambiguous in a court setting is the subjective theory of contract. For judges that use this theory, they deem that there is a need for agreement during the formulation of a contract, and if there is no agreement, then a contract has not yet been formulated. For judges who use this doctrine, they have more liberty in relation to using extrinsic evidence to determine each party’s intent, even in situations where both parties had made the assumption that they had managed to create a final expression in relation to their agreement. An important point to note is that, regardless of the theory that has been applied, or the one that the judges subscribe to, there are instances whereby the parties of a contract may assume that they reached a specific agreement and then later on find out that they each had different interpretations to the most important terms that were used in a specific document of a contract as was noted in this case. The discrepancy that was experienced in this case as part of the contract law is a misunderstanding between the plaintiff and defendant of this case.
The misunderstanding developed from the fact that the seller shipped chicken that can only be used for stewing purposes, while the buyer wanted chicken that were no larger than fryers and broilers only. To put it into perspective, the defendant’s understanding of the term chicken is inclusive of chicken that can be used for stewing purposes. It seems that the defendant was unaware of the size limitations of the chicken that the plaintiff wanted.
In the assessment of the case, Judge Friendly began by using the objective theory. He asserted that, in the interpretation of the contract what was needed to be taken into consideration was the meaning of the words as used in the contract document, and not on the intended meaning by either of the two parties. Judge Friendly then pointed out that the word chicken on its own is a relatively ambiguous term, which led him to refer to the contract to assess if he would be able to make a valid interpretation of the word chicken. However, after the examination of the contract, it was determined that it did not have any form of information that indicated that the large size chicken could only be broilers and fryers and not stewing chicken. This meant that the extrinsic evidence in this case was admissible.
The plaintiff pointed out that they had used German, a language that the two parties are familiar with in their communication. However, the plaintiff pointed out that, within the communication process, the plaintiff used the word chicken an English term to ensure that the seller knew that what was needed was young chicken. The plaintiff noted that he avoided to use the German word “Huhn,” because it would have indicated that he wanted stewing chicken and broilers. To further make a point, the plaintiff called three witnesses to support the claim made in relation to the interpretation of chicken in their line of business. Two of the witnesses stated that the word chicken is used in their line of business to mean broiler. However, the third stated that while chicken is understood to refer to broiler, when he is making an order he is careful to use the term broiler instead of chicken to ensure that the seller understands his order.
For the defendant, he made the claim that when he entered into a contract with the plaintiff that he was new in this industry. This meant that he did not know that there was a particular usage of the term chicken other than the one he knew. In addition to that, he brought forth a witness who is an operator of a chicken eviscerating plant in New Jersey who pointed out that chicken can be used to refer to fowl of any size except a turkey, a goose and a duck. He also pointed out that there is the need to specify the category that one wants when making an order. This was supported by the defendant’s second witness who noted that chicken meant all classifications of that specific genus. Also, the third witness made the point that he would consider a chicken to be anything that is categorized as a chicken in relation to the regulations that have been provided by the Department of Agriculture, which is inclusive of broilers, fryers and fowl. Finally, to even make his case stronger, the defendant made the argument that the broilers and fryers were not available at the significantly cheaper price of the larger birds, and this would have made it clear to the plaintiff because of his knowledge of the market conditions, which type of chicken was being shipped to him.
The judge took into consideration all of the available extrinsic evidence before the judgement. The judge concluded that the plaintiff had lost the case. The reason for this is that, as the plaintiff was the one who had brought this case to court, it was his burden to show that, in the contract, the term chicken should have been interpreted as a clear preference to the narrow meaning, instead of the broader sense of the meaning. As the plaintiff was unable to do this, then he could not have prevailed.
The second case that was assessed was that of Interstate Commerce Commission v. Allen E. Kroblin Inc. In this case, the two parties are in conflict because of eviscerated chicken. On one hand, the ICC stated that dressed and eviscerated chicken are manufactured products. This meant that they are supposed to be transported from state to state using certified trucking companies. On the other hand, for the Department of Agriculture, they were making the argument that chicken are agricultural commodities, and because there is an exception of agricultural commodities such as fruits and vegetables, they can be transported from state to state using less costly uncertified trucks.
The misunderstanding in this case is not based on the term, “manufacture,’ but on how it is classified, and applied in the process of the classification of specific items. However, to put it into perspective, it is important to include the definition of the term “manufacture” in this paper. Manufacture is defined as the production of articles for use from raw, or prepared materials by giving these materials new forms, qualities, properties or combinations through hand-labor or the use of machinery. Based on this definition, the Department of Agriculture held the opinion that dressed poultry cannot be considered to be a manufactured product. However, on the other hand, the Interstate Commerce Commission were adamant that dressed poultry is a manufactured product.
The case was presented in the Federal District Court in Iowa. As has been stated before, on one hand, the ICC held the opinion that dressed chicken should be considered as manufactured products, which should then be transported by certified trucks, and whose licensing is under the organization’s jurisdiction. However, according to the Department of Agriculture, they held the opinion that dressed chicken should only be classified as an agricultural commodity and this implies that they can be transported by uncertified carriers who are relatively cheaper.
Before this lawsuit, the ICC had set up a commission with the intention of finding a suitable answer to this question. The scientists held the opinion that chicken that is dressed, eviscerated, cut up, or even frozen should be categorized as an unmanufactured agricultural commodity. However, for chicken that has been exposed to different processes such as cooking, canning and smoking was considered to be a manufactured product. The argument that was presented was not that the agricultural product had been exposed to some form of processing, but, because of the processing, the agricultural commodity had been changed in such a manner that it had become a new, or distinctive product. This meant that according to the observation that had been made by these scientists, when chicken is dressed and cut into pieces, it does not lead to the chicken to have new characteristics that could be interpreted to have changed the chicken from its previous form. However, the Commission later reversed the recommendation of its report, which contributed to a case being brought to court against them on this matter.
During the proceedings, the court lamented that the two terms, agricultural commodities and manufactured products were not expletively defined in this Act. The court also added that it cannot make an attempt to deduce the meaning of the term, ‘manufactured products’ because of the ambiguity of the term. In the interpretation of the term, the court first assessed the interpretation of the terms manufactured and dressed chicken from the point of view of an agency that is considered an expert in this field. The Department of Agriculture made the assertion that it was the expert in agriculture, and is aware of how chicken should be categorized. However, ICC refuted the claims and claimed that it was the main expert when it came to categorization of products as either manufactured, or unmanufactured because it was responsible in the process of enforcing these regulations, and therefore its interpretation should be accorded more weight.
Unable to use experts to interpret the terms, the courts resorts to legislative history. This means that, it deduces the intent of the legislation during the enactment of this statute. Both parties were in agreement that the purpose of this Act was to benefit the farmers. It can be argued that by using the uncertificated trucks, the farmers are able to transport the goods at a more rapid cost, while incurring lower costs. In addition to that, establishing rapid transportation and lowering the cost of the transportation process will most likely benefit the consumers of these products. Based on these facts from legislative history in relation to the intended beneficiaries, the court made the conclusion that the dressed eviscerated poultry should not be considered to be a manufactured product.
Conclusion
In conclusion, to facilitate the process of creation of a clear and unambiguous representation, the following aspects have to be achieved. The contracting parties should ensure that the words that they select when formulating a contract, actually represent what they mean, and not their intended meanings. The parties need to make sure that they understand the subject of the contract in such a manner that there is no confusion of the terms. The words that are used in a contract should represent the intention of the two parties that are involved in the formulation of the contract because in the court what will be looked are words and not what the drafters intended to mean when they drafted the contract. This means that there is a high responsibility that is placed on the party that is involved in formulating the document to use the right words that will convey what they mean. This is accurately depicted in the Frigaliment case. The buyer held the assumption that it was common knowledge in the industry to refer to broilers and fryers only as chicken. On the other hand, for the seller, held the notion that chicken represents all type of fowls. In addition to that, because the younger fowls are relatively expensive that the older fowls, he felt that the buyer was aware of the type of chicken that was sold to him because he was aware of the market conditions. An important point to note is that, the two parties had acceptable definitions of what is meant by chicken. However, none of the parties was aware of the potential aspect of ambiguity in this term, which could result into a conflict. The court ruled in favour of the defendant because the two parties had not had previous dealings whereby they could have established the meaning of the term. Also, it was not accurately determined that chicken was exclusively used to mean broilers in this industry.
To create a clear and unambiguous representation, there is the need to be precise in terms of the choice of words used. For instance, in the case of chicken, because one is aware of the different meanings as can be determined by reading a dictionary, one should specify the type of chicken that one wants. In addition to that, the court should mainly utilize the subjective theory of contracts, which does not place the sole responsibility of the misunderstanding on the creator of the document. It also allows for the interpretation of a word through exploration without the need of the creators of a document being fully aware of all the possible meanings of a term or its references in a specific industry. It contributes to the formulation of a clear and ambiguous representation.
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