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What does "Contra Proferentem" Mean?

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  • Written By: Mary McMahon
  • Edited By: O. Wallace
  • Last Modified Date: 11 November 2016
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The Latin phrase “contra proferentem” is used to refer to a standard in contract law that states that, if a clause in a contract appears to be ambiguous, it should be interpreted against the interests of the person who insisted that the clause be included. In other words, when people speak ambiguously in a contract, their words can literally be used against them. This is designed to discourage people from including ambiguous or vague wording in contracts because it would run against their interests.

The concept usually comes up when a contract is challenged in court. If the court reviews a contract and finds that a clause is questionable or could have more than one meaning, it determines which party wanted that clause included and interprets in favor of the other party. The contra proferentem doctrine does not apply when a contract was negotiated and both parties were involved in the wording and the inclusion of the problematic clause.

A classic example in which this might come up is when someone sues an insurer. Insurers are notorious for having very strict contracts and being unwilling to negotiate with customers. If a customer can show that a clause in an insurance contract is subject to contra proferentem, the insurer may be obliged to do something against its interests, such as reinstating a canceled policy or providing coverage for a condition it intended to exclude.

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Some legal systems feel that certain types of contracts are inherently unfair because there is an imbalance of power between the parties. Insurance contracts can actually be a good example of this problem because people generally need insurance, while insurers do not necessarily need the business of a single individual. This puts an insurer in a position of power, since it can demand concessions from a customer who is desperate to get a policy written.

The contra proferentem doctrine can help balance the scales somewhat for people who are involved in contracts which may not be entirely fair. Contracts that include ambiguous language can be turned to the advantage of the other party if these ambiguities are later uncovered and become an issue. It is important to note, however, that it is still strongly advisable for individuals to review a contract before signing and to address problematic clauses before signing, if possible, rather than relying on the possibility of legal action in the future to fix them.

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Nepal2016
Post 2

Regular people aren't the only ones who can benefit from this. Big companies sue each other all the time over the fine print in huge contracts. There is not an imbalance of power between big companies, but the doctrine of contra proferentem can still help by keeping the court system from being clogged with endless lawsuits.

parkthekarma
Post 1

I think the contra proferentem rule is a good one, because it penalizes contracts which are deliberately vague or confusing. This can be of great benefit to the "little guy" who has to go through life dealing with big corporations and other organizations. How many things does a person sign in the course of their life that they really have no idea exactly what it says, even if they read all of the fine print?

Most people are not experienced in dealing with contracts and legal matters, and they want to be treated fairly in their daily affairs. Contra proferentem makes it easier for this to happen, because it encourages contracts and agreements to be in plainer language, and less likely to be misleading. Understanding what you are signing can prevent legal problems later.

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