latent vs patent ambiguity

Overview of Ambiguity in Contract Law

In general, courts strive to ascertain the objective intent of the parties to a contract by examining the plain language. Where the language is clear and unambiguous, courts will typically enforce its plain meaning. By contrast, when the language is ambiguous, judges can look to additional evidence (including extrinsic evidence) to discern the intent of the parties.

Ambiguities arise when:

  1. A term is susceptible to more than one reasonable interpretation, or

  2. The contractual language is so indefinite that it cannot be given any certain meaning.

Ambiguities can be categorized in at least two ways:

  1. Patent Ambiguity: Apparent from the face of the agreement.

  2. Latent Ambiguity: Arises only when external circumstances are considered.

2. Patent Ambiguity2.1 Definition

A patent ambiguity is one that is obvious or otherwise evident from reading the contract itself. In other words, when a reasonable person reads the language of the contract, they would immediately recognize confusion, contradiction, or lack of clarity. For instance:

  • A contract clause referencing both “5% interest” and “7% interest” on the same obligation, with no clear indication which rate applies.

  • A sentence that is grammatically incomplete, leading to an apparent but unresolved meaning.

  • Two conflicting provisions in sequential paragraphs.

Because the ambiguity is plainly visible on the written page, this type of ambiguity is deemed “patent.”