In the creation of any commercial contract, there are certain goals you want to accomplish. What is true in most all commercial contracts is that you want an agreement that is completely clear, and where your rights and obligations are unambiguously laid out in “black and white.” Even after you’ve done that, though, you may still have to fight to get the benefit of the bargain that you negotiated and signed. When that happens, be sure to reach out an experienced South Florida commercial litigation attorney about the specifics of your situation.
Why does having a clear and unmistakable agreement matter so much? One reason is that having a contract that is devoid of any vagueness or ambiguity may alter the landscape of your litigation in your favor should your contract partner sue you for breach. As an example, consider the case between a multinational hospitality corporation and an entity that provided corporate registered agent services along with document retrieval and delivery services.
Reportedly, the contract between the two sides said that either one could terminate the contract, with or without cause, without liability, and could do so at any point during the initial term or during any renewal term, as long the canceling party provided written notice within a certain timeframe. The contract’s initial duration was seven years.
Five years in, the hospitality company canceled completely. The cancellation was effective immediately. This seems permissible enough, right? The vendor didn’t think so and sued the hospitality company for breach.
When the contract that is the basis of a breach action seems to have language that clearly supports your position, your opposition may try to get the judge to allow into evidence outside evidence. This is something called “parol evidence” or “extrinsic evidence” and it’s only admissible if the judge first determines that there is some relevant term in the agreement that is vague or ambiguous. That means that, as the defendant in a breach action where the plaintiff is asking to admit parol evidence, your job is to persuade the judge that the contract is clear and unambiguous. Do that and all of the plaintiffs’ extrinsic evidence is inadmissible.
Establishing your contract’s clarity and lack of ambiguity to strengthen your case
The vendor wanted to admit certain pieces of extrinsic evidence, but the hospitality company was able to keep it out of the case, successfully convincing both the trial judge and the appeals court that the agreement lacked any relevant vagueness or ambiguity.
For a contract to be vague or ambiguous, according to Florida law, it must be written in a way that “reasonable minds could differ as to the contract’s meaning.” That wasn’t the case with this contract. It said that the initial term “shall be for a period of seven (7) years from the effective date and thereafter shall be subject to automatic annual renewal unless either party elects to terminate the Agreement, by notice in writing. During this term, and any renewal thereof, either party may terminate this Agreement with or without cause and without liability, by providing written notice of termination to the other party at least ninety (90) calendar days prior to the renewal date.”
The vendor had argued that the agreement could reasonably be interpreted as barring cancellation without penalty during the initial seven-year term. The court stated that this was not a reasonable interpretation. The contract merely defined the duration of an initial term period and explained that it auto-renewed unless a proper cancellation occurred, then defined what a proper cancellation was. This, plus the additional language in the second sentence, made it clear that either party could escape the agreement at any time as long as it met the “90+ days before renewal date” requirement.
There can be many paths to success in your commercial litigation action. Some may relate to discrediting the other side’s proof, while other may focus on keeping part of the other side’s evidence out of the case entirely. Whatever techniques your case requires, rely upon the skillful representation of the experienced South Florida commercial litigation attorneys at Stok Kon + Braverman. Our attorneys have been representing clients in a wide range of commercial litigation cases here in Florida for many years and are ready to put their knowledge to work for you.
Contact us online or by calling (954) 237-1777 to schedule your consultation and find out how this firm can help you.