The Case Against Contra Proferentem

Is the contra proferentum rule obsolete for construction contracts?

When it comes time to discuss the meaning of the contract on any project, the contractor’s project teams often assert that the contract should be construed against the employer because of the contra proferentum principle. It is most strenuously invoked to challenge ambiguities in standard form construction contracts prepared by the employer.

The contra proferentem rule is a principle of contractual interpretation that holds that a contract's ambiguities should be construed against the party that drafted the contract.

However, the case law in many common law jurisdictions seems to be driving it towards irrelevance for construction contracts:

(1) Many courts are taking a literal approach to interpretation and emphasise the natural meaning of contract language over contra proferentem and other interpretive rules

(2) Some courts consider contra proferentum to have no or limited application to commercial and bilaterally negotiated contracts. Courts assume sophisticated parties can negotiate terms and mean what they say

(3) Some courts have held that it did not apply where the clause was clear and unambiguous, even if drafted by one party and in its favour. Courts often caution against the creation of artificial ambiguity

(4) Some courts consider it an interpretive technique of last resort, not a general principle for resolving ambiguities. The rule is not the starting point in any interpretation of the contract

The most astute construction firms are reevaluating their contract strategy in light of the decline of contra proferentem. They're negotiating better, drafting clearly, and avoiding arguments altogether. Are you ready to join them?