FL Today Q&A
Edward J. Kinberg
March 13, 2013 (Originally published in Florida Today in March of 2013)
Ask the Question
This month, instead of answering a question, I will be discussing a practice businesses can apply to avoid contract disputes: Ask the Question.
Based on my 25 years of experience in commercial law and litigation, the single biggest cause of contract disputes is failure to “ask the question.” While I can’t tell you what the question is because it’s never the same, I can tell you that if you “ask the question” you can avoid a costly dispute.
A core principle of contract law is that if you suspect something is unclear or there is a conflict in the contract documents, you have to ask for clarification at that time. If you don’t, you proceed at your own risk and are responsible for the consequences. This rule applies both before and after signing the contract.
Contract defects fall into two basic groups, patent defects and latent defects. A patent defect orambiguity is a defect/ambiguity that is obvious prior to signing the contract: you have to “ask the question” before the contract is signed. A latent defect is one that is so deeply buried that no reasonable person would have seen the defect: you have to “ask the question” as soon as you can.
While there are many cases that discuss patent and latent defects/ambiguities there is a simple test you can apply in either case. If you’re reading a proposed contract and you have difficulty understanding a requirement, it is a patent defect. If you are in the process of preparing or providing the goods or services required by the contract and find it difficult to do so, it is a latent ambiguity.
In the case of patent defects/ambiguities you need to “ask the question” before you submit your price to do the work. In the case of a latent defect, you need to “ask the question” as soon as you discover the defect/ambiguity. In the case of a latent defect, you also need to prepare a written record explaining how the defect was discovered and why it could not have been discovered before the contract was signed.
The first step most attorneys take in analyzing a disputed contract provision is to determine if the ambiguity or conflict is something the contractor should have discovered when the bid was prepared, i.e. a patent ambiguity or latent defect. By showing you “asked the question” at the earliest possible date, you substantially increase the likelihood of early resolution of the dispute.
