Savvy business owners are likely familiar with the basics of contract law. As a result, they know the power of words. A single missed word can have a catastrophic impact on a contract. A typo on a date or the inclusion of the wrong name can turn into a legal nightmare.
But the words themselves are only part of the equation. In some cases, the power of the contract is also impacted by each party’s understanding of the agreement. In a recent example, two parties entered a contract that included a provision where one party agreed to waive the right to prosecute any lawsuit relating to the Telephone Consumer Protection Act (TCPA). In the case, Cunningham v. Vivint, Inc., Vivint, the party that wrote the provision, argued the agreement had no time limit and meant what it said — that Cunningham could not file a TCPA claim against it again. Ever.
What did the court think?
Ultimately the court kicked the issue back to the jury to decide but made some interesting points before sending it back. Most notably, it appears the court was okay with the goal of the provision. It did not argue with the ability to indefinitely bar the other party from filing another TCPA claim.
But the court did take issue with whether or not both parties fully understood what they were agreeing to when they signed the contract. To support this point, Cunningham pointed to a sentence immediately preceding the provision that stated there was a release from the agreement as of the date of the settlement. He claimed to believe that the release date applied to the provision regarding future claims as well.
What is the takeaway lesson?
It is important to recognize the power of words, but do not forget that understanding is also a key to a strong contractual agreement. If crafted wisely and fully understood by both parties, it seems possible to develop a contract that could mitigate the risk of future TCPA claims.