In the event that a contract appears ambiguous, the Doctrine of Contra Proferentem is generally applied by the judges. Judges have begun to appreciate the importance of this doctrine with the passage of time. In a situation in which a clause in the contract can be interpreted in more than one way, this doctrine, which has derived its essence from insurance law, applies. Literally, the phrase means against the offeror. It has Latin origins and can be interpreted as the drafter's guilt, too. The court would prefer an interpretation that is more favorable to the party that has not drawn up the agreement. In other words, the Judge will be more focused on the interpretation that goes against the party that has included the ambiguous clause in the agreement or the disputed clause.

Contra Proferentum emerged in a post-aristocratic world in the late 19th century when laws were divorced from reality. Laws were formed in laboratory-like circumstances during that era and were mostly based on idealistic theories. Therefore, its purpose was ineffective, like most social theories of that era. In contractual matters, the courts did not even believe in interfering. The popularity of adhesion contracts was prompted by this shortcoming. Contracts for adhesion are contracts drawn up by a party with a dominant and stronger negotiating authority. Adhesion contracts are therefore agreements in which conditions such as insurance, purchase agreements, mortgages, major e-commerce giants, etc. are dictated by only one party.

Contra proferentem doctrine is helpful in protecting the rights of consumers. Sometimes an interpretive issue may arise, even in a perfect agreement. If one closely observes the judicial trend in insurance law, he/she will notice that the judges have applied this doctrine against the insurer in several cases. The valid interpretation is taken to be the one that favors the one who had no part in inserting such clauses into the agreement in order to save these parties from the abuse of those clauses in the agreement that can be interpreted in both ways. A term in a contract that limits the liability or rights of the parties to the contract is an exclusion clause or exemption clause. In a contract, there are several ways in which a party may curb or reduce its liability. For example, a party can insert a clause under which the party will not be liable to pay for certain types of losses. But when dealing with the exemption clause, it is important to keep a fact in the back of one's mind, and that is, the court does not go through a similar rigorous exercise where the clause merely limits (instead of excluding) liability. At this juncture, the Court will examine whether or not the other party has adequately explained the intention of the party to exclude or limit liability.

It should also be borne in mind that only when the clauses are unreasonable or discriminatory is this doctrine applicable. If the court finds that the clause is reasonable, sound, and plausible, the contract will be subject to the respective conditions. Lately, when both sides are sophisticated, equally knowledgeable, and have equal bargaining power over the terms of the contract, this principle is facing criticism all over the world for its applicability in commercial contracts. There is an increasing perception that when negotiating, parties involved in commercial contracts should be free to assign risks.

The rule is intended to protect and safeguard the weaker party's interest; it should be used carefully with a great deal of caution. The doctrine should only be applied in cases in which the interpretation of the clause is actually ambiguous and vague. The Contract should also be negotiated by the Parties and not merely plead that the Contract is skewed in favor of a party with enormous bargaining power and develop a habit of carefully reading terms and seeking expert advice to negotiate before executing the Contract in order to avoid unnecessary litigation later or be saddled with unjustified liabilities. In order to prove the genuineness of his case, the party drafting the contract should keep a copy of the proceedings and other pieces of evidence. To make it easier for the other party to navigate, they could use a standard rule for constructing the contract. For a layman, contracts should be extensive, clear, and easy to comprehend.

This Article Does Not Intend To Hurt The Sentiments Of Any Individual Community, Sect, Or Religion Etcetera. This Article Is Based Purely On The Authors Personal Views And Opinions In The Exercise Of The Fundamental Right Guaranteed Under Article 19(1)(A) And Other Related Laws Being Force In India, For The Time Being. Further, despite all efforts that have been made to ensure the accuracy and correctness of the information published, White Code Legal and Tax shall not be responsible for any errors caused due to human error or otherwise.