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Buying & Selling a Business

What's the risk of leaving qualifying language like 'material' undefined in the agreement?

TSL Written by the Treadstone Law team· Updated August 2026

The main risk isn't that the word becomes meaningless — it's that leaving it undefined shifts the real work of interpreting it from the negotiating table, where both sides have context and leverage to compromise, to a later dispute, where one side is trying to enforce a claim and the other is trying to avoid one, often with real money and a damaged relationship on the line. An undefined qualifying word like "material" invites each side to read it in whatever way suits its own position when a disagreement actually arises, and resolving that disagreement, whether through negotiation, mediation, or litigation, costs real time and money that a clearer definition could have avoided.

There's also a subtler risk: undefined qualifying language can make it harder to predict outcomes even for the lawyers advising each side, since reasonable people can genuinely disagree about where an undefined threshold sits, which makes settlement of a dispute harder to reach compared to a dispute over an objective, defined standard.

Leaving some genuinely flexible language in an agreement isn't always wrong, but doing it deliberately, and knowing exactly which clauses are gambling on later goodwill versus which need hard numbers, is a decision worth making with a Treadstone business lawyer rather than by default.

Key takeaways

  • The core risk is shifting interpretation from the negotiating table to a later, costlier dispute.
  • Each side can reasonably read an undefined term differently once a disagreement actually arises.
  • Undefined qualifiers make outcomes harder to predict, which makes disputes harder to settle.
  • Decide deliberately which clauses need hard definitions versus which can tolerate flexible language.
This is general information, not legal advice. It doesn’t create a lawyer–client relationship, and the rules can change. For advice on your situation, a Treadstone business lawyer can help.
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