Whether a contract is ambiguous is a question of law over which courts exercise free review. Ambiguities can be either patent or latent. Idaho courts look solely to the face of a written agreement to determine whether it is patently ambiguous. A latent ambiguity is not evident on the face of the instrument alone, but becomes apparent when applying the instrument to the facts as they exist. To determine whether a contract is patently ambiguous, a court looks at the face of the document and gives the words or phrases used their established definitions in common use or settled legal meanings. For a contract term to be ambiguous, there must be at least two different reasonable interpretations of the term, or it must be nonsensical.
Plaintiff lessor filed an action against defendant lessee seeking to recover unpaid rent, damages for failure to return a loader in the condition required by the equipment lease agreement, and prejudgment interest. Defendant claimed that the term "working day" in the lease agreement was ambiguous. The trial court granted summary judgment in plaintiff’s favor, holding that the lease agreement was not ambiguous. Defendant appealed the summary judgment. The supreme court affirmed with modification.
Was the equipment lease contract between plaintiff and defendant ambiguous because it did not define "working day?"
Defendant did not contend that the term "working day" was a term of art within the construction industry. In fact, defendant did not present any relevant evidence as to an alternative definition of the term. When the term "working day" was given its ordinary meaning, the lease agreement was not ambiguous, and plaintiff was entitled to rent for every day of the lease term except Sundays and holidays.