News & Noteworthy

Authored - NJ Contract Law Update - When Does an Ambiguity Require Strict Construction, Rather Than a Plenary Hearing?
JULY 31, 2013

In Adel v. NFPS, Inc., 2013 WL 2459858 (N.J.App.Div. June 10, 2013), the Appellate Division explained that when dealing with a right of first refusal on real estate, the presence of an ambiguity requires not fact-finding at a plenary hearing, but rather strict construction against any interpretation that the right of first refusal runs with the land. Unlike almost any other ambiguity in an agreement or the like, when attempting to impose on future owners the permanent burden of a right of first refusal, such a clause must " strictly construed". Thus, any ambiguity will preclude the right of first refusal from applying to future owners; which will be allowed only when the language is so clear as to constitute an "obvious purpose" on that effect.

For that reason, the contractual right of first refusal in Adel was construed outside the normal bounds of contract interpretation, to summarily preclude exercise of a right of first refusal after the 'first sale'.

The moral of the story is that when faced with an ambiguity, there may be special circumstances favoring the construction you wish; so do not hesitate to perform the necessary legal research to see if you are in an area of exception.

Contact & Legal Disclaimer

Clark Alpert is the author of Guide to New Jersey Contract Law, published by the New Jersey Institute for Continuing Legal Education, originally published in 2007 and updated in November 2011. His updates on New Jersey contract law are based in recent issues and practical methods for addressing similar situations in your practice or business. They are not intended to serve as legal advice. Clark welcomes your questions and comments.

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