Certainty of Terms in Contracts and Negotiation

Negotiation Tip
January 4, 2015
Verify the Facts – Don’t Believe Everything You Hear
January 28, 2015

Certainly of terms is verbiage used in defining language in contracts or agreements. What happens when terms are not clear? The understanding of the intent of the contract and its ability to be enforced becomes problematic to say the least.

It is essential to the enforceability of a contract that its terms are sufficiently clear to permit the courts to conclude that a contractual agreement was intended. The courts will apply well established rules of construction to interpret the language used by the parties. Thus, to be fatally uncertain, the contract must be so indefinite as to have no exact meaning.

What does that mean exactly in simpler terms? It means that the language in the contract has to be clear in order to make a determination that an agreement was intended at contract formation.

This also applies to things outside of contract formation as well. When you give instructions for tasks or when you send out a written letter regarding an issue or situation, it must be clear to enable the other party to reasonably understand what is being requested so they can act appropriately to carry out the request.

Perfect example of this recently came up from my HOA. I received a letter (click link below to view letter) basically summoning me as a defendant to the next HOA board meeting for non-compliance regarding “miscellaneous plumbing bill back”. The letter indicated I may forward any written information to the board and failure to appear or respond may result in a $150 fine or bill back. Huh?

The letter at the top indicated “certified mail/return receipt” and there was a second form (click the link to view letter) that was entitled “NOTICE OF DEFENSE” and indicated in the Subject line: COMPLAINT: HEARING/DEFENSE – Failure to Comply regarding: Miscellaneous.

HOA Letter – Certainty of Terms

At first glance I was totally confused. I was being summoned to a board meeting to defend myself against some kind of non-compliance? I had no idea what I had not complied with or why I was having to defend myself against the non-compliance with the threat of a $150 fine.

I could only guess what this was about. It may have had something to do with one of the tenants upstairs problems where their hot water heater and their toilet both leaked into my unit causing damage at two different times. For the toilet they claimed there was nothing wrong in their unit so I called the HOA who called a plumber. I could only guess that was what this was about but since there was no specific information, it was only a guess.

However, the seriousness of the document gave me a concern. I had not received any information prior to this regarding an issue and was surprised at the vagueness of the letter and legality of the document.

I contacted the HOA and spoke with someone who indicated they were “new” and this was just a form letter they were told to send out and it was no big deal, I was not in any kind of trouble and that it did have to do with the calling of the plumber and that I was responsible for the fee because it was not structural, it was a personal property issue. Mind you this wasn’t’ stated anywhere in the letter, nor was an invoice attached from the plumber, nor was it clear that they were actually asking me to pay that fee.

Unfortunately this did not sit well with me because of several things, 1. The person used the “I’m new” excuse to alleviate responsibility. 2. The person indicated it was “no big deal” when clearly a big deal according to the document. 3. The person said I wasn’t in trouble and there was no “non-compliance” it was just a form letter she filled in with the minimum information. 4. She said I wasn’t in violation of anything but just a form letter she had to use. The response indicated I needed to acknowledge receiving the “violation letter.”

She was surprised I was so upset. I attempted to explain the significance of sending something like that when it wasn’t even accurate and she indicated so in our phone conversation. She said “you were told when the plumber was called out that you could be held responsible if it was found to not be structural.” So because I was told something over 2 months ago I should know why they are sending me a letter that says “miscellaneous plumbing bill back?” Not likely that would be clear to anyone.

I asked for a detailed explanation in writing about what this was actually about to include a copy of the invoice so I could properly respond to the actual situation. She said she would send something but wasn’t sure she could find the invoice. What????!!! They want me to pay for something they are claiming is my responsibility and may not have the documentation to back it up? There’s something really wrong with this.

In the end, I got an email indicating they decided it was not my responsibility and it was the neighbors after all and to consider the matter close. I offered some feedback in my response and hope that when she sends something to the neighbor, it is clear what they are requesting.

What is the lesson to be learned from this? Certainty of terms is critical in all correspondence. They should have sent a letter outlining everything they wanted, included a detailed explanation of the situation, a copy of the bill from the plumber, a request for what they wanted from me and if I was able to refute it, the ability to do so in writing without having to go to some board meeting and defend myself like I’m a defendant in a court case.

The bottom line is make sure you are clear in your requests whether it’s in writing or verbal. Either can be misinterpreted but if the terms are ambiguous, vague or limited, you are likely to have more problems to resolve other than the issue at hand.

 

Eldonna Lewis Fernandez
Eldonna Lewis Fernandez

Veteran negotiation and contracts expert Eldonna Lewis-Fernandez, author of “Think Like a Negotiator,” has over 30 years of experience crafting killer deals both stateside and internationally, many in excess of $100 million. She’s currently the CEO of Dynamic Vision International — a specialized consulting and training firm that helps individuals hone negotiation skills — as well as a nationally regarded keynote speaker, session leader and panelist on the Art of Negotiation. Eldonna may be reached online at www.EldonnaLewisFernandez.com

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