Oregon Construction Contractors (CCB) Practice Test

What is a likely outcome if the interpretation of a contract goes against the party who wrote it?

1. The contract is voided

2. A new negotiation is required

3. The party may be penalized

4. The intent of the contract cannot be fulfilled

The correct answer is: The party may be penalized

When the interpretation of a contract goes against the party who drafted it, there can be significant consequences for that party, often manifesting as a penalty. This is rooted in the principle of "contra proferentem," which states that ambiguous terms in a contract should be interpreted against the interests of the party that created the ambiguity. This means that if there is confusion or a dispute over the contract’s language, the drafting party may find themselves at a disadvantage. For instance, if a contractor includes vague language in a contract and the interpretation ultimately favors the client, the contractor might not only have to comply with the unfavorable interpretation but could also face legal or financial repercussions, such as being liable for damages or needing to fulfill terms they did not intend to agree to. The other possible outcomes, such as voiding the contract or requiring a new negotiation, do not directly stem from the interpretation of the contract against the drafter. The intent of the contract may still be fulfilled despite an unfavorable interpretation, as long as the terms are clear enough to enforce. Therefore, the potential for penalties stands out as a direct and likely outcome when a contract's interpretation does not favor its writer.