When drafting or negotiating a contract, it is important to consider key time-related facts. In other words, if there are important provisions dealing with time, you don’t want to leave them undefined as that can create an ambiguity in the contract.

In a recent case dealing with an investment contract, discussed here, that’s exactly what happened. The contract allowed investors to exercise an option to return their equity in exchange for a refund of their investment but the contract didn’t contain an expiration date on when the option must be exercised. The investors tried to exercise the option two years later leading to a dispute as to whether that was a “reasonable time.” This is because the lack of clarity regarding this temporal fact led to a latent ambiguity meaning it was a question of fact as to whether the investors exercising the option two years later was reasonable under the circumstances.