When the provisions of a contract are unambiguous, a court will enforce the contract as written, without citation to any extrinsic evidence—such as deposition testimony as to what the parties intended the provisions to signify. When the provisions of a contract are ambiguous, a court has multiple interpretation and construction options. Generally, a contract with ambiguous terms will be construed against the drafter. However, in most jurisdictions, this rule applies when one of the parties is in a “superior bargaining position.” A “superior bargaining provision” can be evidenced in multiple ways, including if the party has greater experience or is the only party represented by counsel. The more common scenario is that contract parties have roughly equal bargaining and each have attorneys. If an ambiguous contract results from this arrangement, a court can look outside the four corners of the agreement to extrinsic evidence, though the court is not per se required to do so.

A federal court decision in Kentucky is one of the latest cases where a court had to interpret a contract with potential ambiguities, notwithstanding the reputed sophistication of the contracting parties and their counsel. See Humana v. Cave Consulting Grp., No. 3:13-cv-759-DJH-RSE, 2018 WL 4492477 (W.D. Ky. Sept. 19, 2018).  This case concerned a license for medical-related software which, unsurprisingly, was replete with technical terms that referenced, inter alia, the software’s “Interface Reports,” and what entailed a “Client Data” and a “Client Database” as referenced in the license. The scope of the license’s definition of “Confidential Information” was also primarily at issue.

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