Ambiguous Contract Terms in Ontario: How Courts Resolve Them Against the Drafter

Two sides read the same clause and walk away with two completely different understandings of what it means. This happens more often than most people expect, especially with contracts full of standard-form language nobody negotiated line by line. When a genuine ambiguity survives ordinary interpretation, Ontario courts have a tie-breaker rule that can matter enormously: interpreting the disputed term against the party who wrote it.

Here's how that process actually works, and where its limits are.

What Makes a Contract Term "Ambiguous"

Not every disagreement about a contract's meaning counts as a legal ambiguity. A term is genuinely ambiguous when it's reasonably capable of two or more different meanings after applying the ordinary tools of contract interpretation — it's not enough that one side simply prefers a different reading, or that the clause could have been written more clearly in hindsight.

How Courts Interpret Contracts First

Before reaching for any tie-breaker rule, an Ontario court will try to resolve the meaning of a disputed clause using standard interpretive principles, including:

• The plain, ordinary meaning of the words used
• The contract read as a whole, rather than the disputed clause in isolation
• The surrounding circumstances known to both parties at the time of signing
• Commercial common sense — favouring an interpretation that makes sense for the type of deal involved, over one that produces an unreasonable or absurd result

Only if genuine ambiguity survives this process does a court move on to a rule like contra proferentem. In many disputes, careful application of these ordinary principles resolves the disagreement entirely, and the tie-breaker rule never needs to be used at all.

The Contra Proferentem Rule: The Tie-Breaker

Contra proferentem means "against the one who put forward [the document]." Where a genuine ambiguity remains after ordinary interpretation, and one party drafted the clause — or the standard-form document it appears in — courts often resolve that remaining ambiguity against the interests of the drafter. The rationale is straightforward: the party who chose the words had the opportunity to make them clear, so any real uncertainty shouldn't be resolved in their favour at the other side's expense.

Where It's Applied Most Often

This rule tends to matter most in contracts where one side had little or no ability to negotiate the specific language, including:

• Insurance policies, where the insurer typically drafts the entire policy
• Standard-form consumer contracts, where terms are presented on a take-it-or-leave-it basis
• Boilerplate clauses in commercial agreements that one party's counsel originated and the other side accepted largely as-is

It applies less forcefully — or not at all — where both parties had genuine, roughly equal input into the specific wording, since the underlying rationale (one side controlled the drafting) doesn't hold up as well.

Limits on the Rule

Contra proferentem is a rule of last resort, not a first move:

• It only applies once a court has concluded the term is genuinely ambiguous after ordinary interpretation — it can't be used to manufacture ambiguity where the language is actually clear.
• It doesn't override a clear, unambiguous term just because one party dislikes the outcome.
• It's less persuasive where both sides had real negotiating power and input into the specific clause, even if one side's lawyer physically drafted it.
• It's one interpretive tool among several — courts weigh it alongside other principles rather than applying it mechanically.

Frequently asked questions