Ambiguity — Patent vs. Latent; the Frigaliment Problem

Module V is the first time we ask not whether a contract exists but what its words mean. Interpretation is the ascertainment of the meaning of an agreement or a term in it, and the work begins when a word turns out to be reasonably susceptible to more than one meaning. That is ambiguity, and ambiguity is, at bottom, a burden-allocation problem: the party arguing for the narrower meaning has to prove it. Today’s job is to see how a court decides that a word is ambiguous, how it sorts the kind of ambiguity, and what each kind does to the evidence and the burden.

Patent vs. latent ambiguity

A patent ambiguity is unclear on the face of the writing — you can see the problem reading the contract alone (a delivery clause that says “the first and third Friday” without saying whether “first” means the first calendar Friday or the first business Friday). A latent ambiguity reads as perfectly clear until you try to apply it to the world, and only then splits in two. Raffles v. Wichelhaus is the classic latent case: the contract named the ship Peerless, and the words were clear until it turned out two ships carried that name. The distinction matters because it tells you when the court will reach outside the four corners: a latent ambiguity can be shown only with extrinsic facts about the world to which the term is applied.

The burden and the hierarchy

R2d § 201. Where the parties attach the same meaning, that meaning governs; where they differ, the meaning of one party prevails if the other knew or had reason to know of it. Once a court declares a term ambiguous, the party asserting the narrower meaning bears the burden of proving it by a preponderance. R2d § 202 supplies the rules in aid of interpretation — read the writing as a whole, give all terms effect, and weigh the circumstances, course of performance, course of dealing, and trade usage. R2d § 203 ranks those sources: specific terms control general language, and negotiated terms control standardized ones. R2d § 20 marks the outer limit — where two parties attach materially different meanings and neither has reason to know of the other’s, there is no contract at all for want of mutual assent.

Cases

Frigaliment Importing Co. v. B.N.S. International Sales Corp. is the anchor: the buyer ordered “chicken” expecting young broilers; the seller shipped older stewing fowl. Judge Friendly held that “chicken” standing alone was ambiguous, ran through dictionary meaning, the contract language (including the German huhn), USDA regulations, trade-usage testimony, and market price, and held that the buyer — the party urging the narrow meaning — failed to carry its burden. It matters because it shows the interpretive hierarchy in motion and pins the loss on the party who could not prove the narrower reading. Raffles v. Wichelhaus is the limit case: two ships named Peerless, no shared meaning, no reason for either side to know of the other’s, and so no contract. It matters because it marks where interpretation stops and mutual-assent failure begins.

What you should be able to do

Given a writing plus extrinsic facts, classify the ambiguity as patent or latent and say what that classification does to the evidence. State what the Frigaliment buyer had to prove, what evidence might have shifted the result, and who bears the burden. And distinguish a Frigaliment ambiguity (one term, two meanings, burden on the narrower party) from a Raffles misunderstanding (two meanings, no shared basis, no contract). Next class moves inside the four corners: intrinsic evidence and the canons of construction.