Let’s say there a part of the contract that is a little ambiguous. For example every month I ship you a product and charge you $X. Before the one-year term of the contact expires, we agree to extend it out six more months. Now in the original contract, any time after the year (because we assumed you would only want to be contractually obligated for the year and after that buy the product if needed and as needed), I can charge more money if you buy my product but I don’t charge the extra money and still bill you $X every month.
At the end of the six months, I now now claim you owe me for all of the extra charges that have accrued. You counter that when we extended out the contract the extra six months, so did all of the terms including the costs. Now here is the question:
If a judge does find that part of the contract is ambiguous, is there a legal principle that if a contract could be interpreted as A or B and both parties act as if the contract says A during its term and later one party says it should be interpreted as B, that the A interpretation is the legal one.
“If a judge does find that part of the contract is ambiguous, is there a legal principle that if a contract could be interpreted as A or B and both parties act as if the contract says A during its term and later one party says it should be interpreted as B, that the A interpretation is the legal one.”
Yes, if the terms genuine are ambiguous (and your narrative is a bit confusing, so maybe!) one would argue that the “course of performance” and/or the “course of dealing” (i.e., how the parties repeatedly behaved during the term of the contract) would establish what the parties intended. One might also suggest that, in the alternative, there was anyway a waiver of the uninvoiced “extra” charges. (I am confused whether the original contract contemplated this accrual of charges, if so, then there is no waiver. If it’s just, “Suprise! You also six months back shipping & handling!”, then there is a waiver argument.)
Also, I believe that there is a rule that an ambiguous clause is interpreted against the party that added that clause to the contract. So, if “you” wrote the clause into your Standard Form Contract, then the court would be likely to resolve the ambiguity in favor of “me”. The reason for this is that it gives an incentive to write concise clauses.
All of the above are correct. I would also add “Estoppel” to your contract defense. You relied to your detriment on my actions (by sending you invoices at the old prices) and planned your business accordingly, therefore I can’t now legally claim that I increased the prices. Plus UCC 2-305 requires that the seller set a default price in good faith. Sending invoices purporting to be the price and hitting you six months later with an “updated” bill is very bad faith in business dealing.
The question the judge is going to ask - or the other lawyer argue - is why you did not send a bill out or otherwise notify the other party after the first month if you were underpaid. If you raised the pricethen the question would be, how did you inform the other party of this fact. Should the other party have known the price was higher, and why - all questions you have to explain. Its not a price increase unless the other party has a chance to agree to it.
A contract is an agreement. If it does not appear there was agreement about the new terms, or they seem to be slipped in in an underhanded sneaky way, the court will probably not accept that.
Agree with all the above. A very general rule is contra proferentem, “against the one claiming it”, which means the court will tend to construe a clause against the person seeking to rely on it. The case you lay out in the OP is a pretty straightforward one: it seems clear the two of you didn’t really intend to keep the “charge extra after a year” clause in there when you extended the contract. That’s evidenced by the fact that you charged them at the old price for six straight months and never mentioned the clause you’re now trying to ping him with. You’d almost certainly be estopped from trying to rely on the clause before you even started talking about contra proferentem.
However, you could make the case a lot less straightforward. Imagine both sides were commercial businesses, and they extend the contract and leave in the “charge extra after a year” clause, and one side does charge extra in line with that clause at the first opportunity. No court is going to feel much sympathy for the business that forgot to check what clauses they’d left in the contract before signing it.