Hadley v. Extreme Technologies, Inc.

Ambiguities in contract provisions are questions of law, and the trial court erred in this breach of contract case when it instructed the jury that it was the jury's job to determine the meaning of an ambiguous contract provision.

Plaintiff, inventor of a type of bow (Inventor), showed his original design to Defendant, an archery equipment company (Company), after signing a non-disclosure agreement to the effect that Company would not use or disclose Inventor's design for a period of two years. One year and eight months after the agreement, Company began to manufacture and sell bows of a similar design. Inventor filed a breach of contract claim for Company's use of his design elements within the two year period. Company argued there were no damages because the two-year provision meant either that Inventor could not assert a claim after two years or that Company's liability for damages ended after two years. At trial, the court instructed the jury that the two year provision was ambiguous, and its meaning was a question of fact for the jury to determine. The jury decided that Company breached the contract, but that there were no damages as a result. The Court held that ambiguity in a contract provision is a legal question, and the trial court erred in allowing the jury to determine the meaning of the provision as a factual question. A decision will be reversed on appeal if there is some likelihood that the error affected the result of the trial. The Court found some likelihood that the erroneous instruction caused the jury to wrongly interpret the ambiguous provision and to incorrectly apply causation regarding damages as a result Reversed and remanded.