ABSTRACT
The overriding objective in contract interpretation under Finnish law is to identify the common intent of the parties concerned. However, if the common intention of the parties cannot be traced and it is difficult to find subjective understandings of either party as being better reasoned than those of the opposing party, a secondary set of interpretation rules, goal-oriented interpretation, comes into play. Of these rules, the best known is the rule of ambiguity. According to this rule, a unilaterally drafted and ambiguous contract term must be interpreted to the detriment of the drafting party. The significance of the rule of ambiguity is emphasized in business-to-consumer contracts in which the business concerned has drafted its standard terms unilaterally. In business-to-business contracts the significance of the rule of ambiguity is less clear. It is evident that such rule is in force as a non-codified rule even in the case of business contracts, but the questions when and how it is applicable have received only limited attention both in case law and in legal literature. In this article it is found, inter alia, that: a) The dichotomy between party-oriented and goal-oriented interpretation must not be understood too formally. Even though it is in principle clear that a party-oriented interpretation is primary to a goal-oriented interpretation, especially in the case of business contracts, a goal-oriented interpretation may be used to particularize the analysis performed through the party-oriented method. b) The main scope of the application of the rule of ambiguity consists of cases where one of the parties, the drafting party has had superior negotiation power over the counterparty when the contract was concluded. Thus, the rule of ambiguity is applied mainly when the parties are not equal. c) The rule of ambiguity should not, as a main rule, be applied in situations where each of the parties has been able to determine a part of the contractual content. Such a circumstance normally indicates a relatively equal bargaining power between the parties and that each party could have influenced the formulation of any term if desired. d) The mere fact that one party has drafted the disputed clause alone, should not necessarily lead to the application of the rule of ambiguity if the counterparty has also had the full possibility to recognize the ambiguity and to request a clearer formulation as a condition for the party’s commitment to the contract.
Norros, Olli, On the Application of the Rule of Ambiguity in Business Contracts (May 8, 2024), Tidskrift utgiven av Juridiska Föreningen i Finland (JFT) (2024) 1–2; Helsinki Legal Studies Research Paper No 86.
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