The Ambiguities Clause . . . What’s That?

“Close your eyes to see clearly.”

– Ancient Zen Saying

ACTUAL CASE HISTORIES: Something I have learned over decades of being an attorney is that the law is mostly common sense, a kind of practical wisdom, applicable to different situations, handed down from one generation to the next. Despite the many, varied and often deserved criticisms of the legal system, overall, it works. I believe that more each day.

Here is an illustration: If a contract provision seems unclear, then Courts will, as a general rule, interpret that provision against the interests of the party whose lawyer drafted it. This is referred to as the “Interpretation Against the Drafter Rule” of contract analysis.

What is the common sense underlying the “Interpretation Against the Drafter Rule”? It rewards clear contract drafting, and punishes lazy or sleazy contract drafting, so that, hopefully, there will be fewer controversies over what contracts mean, and less need for the time, attention and costs of attorneys and Courts. This is a good example of common sense, applied to a common problem, in the common interest.

To get around the “Interpretation Against the Drafter Rule,” some lawyers insert a clause into the contracts they draft that provides, in effect, “The parties agree that no one party drafted this contract, but we both contributed to it, and, so, the ‘Interpretation Against the Drafter Rule’ doesn’t apply to this contract.” This kind of clause, most often called an “Ambiguity Clause,” is nothing more or less than an attempt to evade the “Interpretation Against the Drafter Rule,” and thus accountability for their sloppiness or sleaziness. The Ambiguity Clause seeks to take away risk of the consequences of ambiguity from the shoulders of the drafter, and place it on the shoulders of the non-drafter.

Since most workplace agreements are drafted by employers’ lawyers, and not by employees’ lawyers, Ambiguities Clauses are especially common in workplace agreements. Thus, it is wise for employees and their lawyers to watch out for the Ambiguity Clause, and to consider taking certain precautions to address the additional risk it represents.

LESSON TO LEARN: This is what a typical “Ambiguity Clause” looks like:

    Ambiguities: The parties agree that this agreement was drafted by the lawyers for both parties, and so neither party can be alleged to be the primary drafter. Accordingly, any rule or law of contract interpretation that would require interpretation against the interests of one of the parties is inapplicable when interpreting this agreement, and in all events.”

Here is another common version of an “Ambiguities Clause,” with a different title:

    Construction: The parties acknowledge and agree that any statute, principle, or rule of contract construction that requires that ambiguities are to be resolved against the drafting party, shall not be employed in the interpretation of this Agreement.”

If you notice an “Ambiguities Clause” in any workplace agreement you are being asked to sign, now you know what it means, and you are aware that it being there leans a bit against your interests, and so you are well-advised to be on guard a bit more than usual for ambiguities in the agreement, before signing it.

WHAT YOU CAN DO: If you are considering signing a workplace agreement of any kind, it is always prudent and wise to read it over carefully before you sign it. If it contains an “Ambiguities Clause,” be even a bit more cautious. If you notice an “Ambiguities Clause” in the agreement under your consideration, here are some ideas, tips and thoughts to bear in mind:

1. While every agreement should be carefully reviewed before it is signed, careful review and analysis is especially important if it contains an “Ambiguities Clause.” It goes without saying that you should carefully read every workplace agreement you are asked to sign. Since you are legally bound by anything you sign, surely you need to understand the meaning and ramifications of what you sign.

I do not always suggest using the services of an experienced employment attorney for every workplace issue or agreement, as it is often unnecessary. However, where a written agreement is under consideration, especially one with an Ambiguities Clause, I almost always recommend a prior legal review or consultation, because an Ambiguities Clause removes the protection otherwise provided to you by the law, by removing the “Interpretation Against the Drafter” rule.

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2. “Ambiguities Clauses” might have various different titles. I have seen Ambiguities Clauses with these varied names: “No Interpretation Presumption,” “Construction of Agreement,” “Drafter Not Determinative,” “Mutual Drafting,” and “No Presumption of Drafter.” The name given to such a clause generally does not matter. What does matter is what the provision seeks to accomplish. Any clause, however titled, that removes the “Interpretation Against the Interests of the Drafter Rule,” is an Ambiguities Clause.

By the way, to quickly determine whether an agreement has an Ambiguities Clause in it, you can usually find an Ambiguities Clause either (a) among the last five or so clauses in the agreement, or (b) in another clause usually entitled “Miscellaneous Provisions.” That’s precisely where I look for them.

3. The existence of an Ambiguities Clause is not a “make-or-break” issue, what I call a “Red Light” issue, but rather a “Yellow Light” issue, one that says, “Slow down, and be cautious.” I don’t know if I ever fought against having an Ambiguities Clause remain in a client’s agreement, but I know they keep me especially awake, alert, and aware of the need for heightened precision, certainty and clarity in an agreement. That is especially true if I sense the drafter of the agreement otherwise seems to be a “wise guy or wise gal.”

At the same time, if the Ambiguities Clause in your agreement says that “both sides contributed to the drafting of this agreement,” and that is not true, it can’t hurt but to remind your employer that “I have a problem with agreeing to an untruth. Can we delete that clause?” Would I fight hard to get it removed? Probably not.

4. Because Ambiguities Clauses seek to negate a time-honored rule of contract interpretation that has been found to be valuable over the generations, many Courts refuse to honor them. As they should, because an Ambiguities Clause serves to remove accountability for legal laziness and/or sleaziness by lawyers in drafting legal documents. But don’t wait and hope that a Court rescues you; try your best to identify Ambiguities Clauses and be more careful. While many Courts will not honor Ambiguities Clauses, still, many honor them, too. Clarity and accountability in legal agreements are always your “friends.”

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5. If anything in an agreement seems unclear, vague or ambiguous, or not to make sense, don’t fear asking your employer’s HR or Legal Staff what it means, or how it works, or to explain it better in the agreement, preferably sent by email. This both makes a record that something was, in fact, ambiguous, and not “jointly written,” and is always a potential defense to what you signed. That is almost the logical opposite of what an “Ambiguity Clause” does – it points directly to there being just one drafter of an ambiguous clause, and effectively and properly, places the responsibility for ambiguous wording back where it belongs: on the shoulders of the drafter of the agreement, almost always the employer’s attorneys.

6. Especially on important points, such as how a bonus will be calculated, consider requesting the insertion of an illustration or example that reflects your understanding. To enhance clarity of important, but confusing, contract provisions, and to overcome the effect of an “Ambiguity Clause” in your agreement, you might offer your manager, HR or your employer’s legal staff, your own understanding of its meaning requesting the insertion into the agreement of an example, as us lawyers say, “For Illustration Purposes Only.”

For example, consider sending to your manager, HR and/or legal staff, an email note advising that an ambiguous provision needs to be clarified by inserting a clarifying example, such as “For illustration purposes only, the employee’s bonus will be calculated by multiplying (a) the gross profit of the Special Software Department’s gross sales for the month in question, (b) times 0.00125, (c) and then rounding up to the nearest $1,000.

Such an effort may work to get you the clarity you need; if not, at least you have an email that makes a record of your effort, which can be helpful in resolving a later dispute without resort to litigation.

7. What’s there to lose by asking for clarity or an illustration? Nothing. I have never once seen a request made to a manager (or other decision maker at work) result in any sort of risk or harm where the request was (a) made Respectfully, (b) Reasonable in what was requested, and (c) was accompanied by a compelling Rationale, what I call “The Three R’s of a Successful Request.”

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8. The employment relation is becoming increasingly “legalistic” in nature, so you might as well become comfortable with “all that legalese,” and the more you know, the more confident you will be. I am not recommending you go to law school; we surely have enough “legal eagles” out there. But just as I usually feel uncomfortable with new software until I learn it, it may very well be a good idea you not get a “mental freeze” when you encounter provisions in legal documents, especially in your work life, where they are arising more frequently.

In Summary . . .

At work, whenever you are given an agreement to sign, go over it carefully, and make sure you understand its provisions. Only then can you decide (a) what to accept, (b) what to ask be changed, and (c) what, if anything, to stand firm on. If you find an “Ambiguity Clause” in your agreement, double your efforts to understand each provision. There are steps you can take to encourage clarity, and you can always ask that the Ambiguity Clause be deleted, as well. Since Ambiguity Clauses increase your risk, they are like a “Yellow Light” on the roadway, an indication that you should “Slow down.”

P.S.: If you would like to speak directly about this or other subjects, Mr. Sklover is available for 30-minute, 60-minute, or 120-minute telephone consultations, just [click here.] Evenings and weekends can often be accommodated.

SkloverWorkingWisdom™ emphasizes smart negotiating – and navigating – for yourself at work. Negotiation and navigation of work and career issues requires that you think “out of the box,” and build value and avoid risks at every point in your career. We strive to help you understand what is commonly before you – traps and pitfalls, included – and to avoid the likely bumps in the road. For those given an agreement to consider, noting the presence of an Ambiguity Clause is something of a “flashing red light sign” to read and think more carefully than ever, and perhaps requesting its deletion may be the essence of wise “navigation and negotiation.”

Always be proactive. Always be creative. Always be persistent. Always be vigilant. And always do what you can to achieve for yourself, your family, and your career. Take all available steps to increase and secure employment “rewards” and eliminate or reduce employment “risks.” That’s what SkloverWorkingWisdom™ is all about.

*A note about our Actual Case Histories: In order to preserve client confidences, and protect client identities, we alter certain facts, including the name, age, gender, position, date, geographical location, and industry of our clients. The essential facts, the point illustrated and the lesson to be learned, remain actual.

Please Note: This Email Newsletter is not legal advice, but only an effort to provide generalized information about important topics related to employment and the law. Legal advice can only be rendered after formal retention of counsel, and must take into account the facts and circumstances of a particular case. Those in need of legal advice, counsel or representation should retain competent legal counsel licensed to practice law in their locale.

Sklover Working Wisdom™ is a trademarked newsletter publication of Alan L. Sklover, of Sklover & Company, LLC, a law firm dedicated to the counsel and representation of employees in matters of their employment, compensation and severance. Nothing expressed in this material constitutes legal advice. Please note that Mr. Sklover is admitted to practice in the state of New York, only. When assisting clients in other jurisdictions, he retains the assistance of local counsel and/or obtains permission of local Courts to appear. Copying, use and/or reproduction of this material in any form or media without prior written permission is strictly prohibited. All rights reserved. For further information, contact Sklover & Company, LLC, 45 Rockefeller Plaza, Suite 2000, New York, New York 10111 (212) 757-5000.

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