I agree. It is almost always in your best interests to define as many terms as possible to avoid potential ambiguity.
But on the flip side ... there are also times when you might not want to do that ... one being ... where you can't agree on the provision ... the provision is not material to the outcome ... and you don't want to blow the deal. This is particularly true when the contingency at issue is highly unlikely to materialize.
It's a judgment call.
But as a general rule ... it is best to define as much as you can.
Ambiguity in contracts leads to needless litigation ... almost all of which could have been easily avoided at the outset.
Most litigation I see arises when people try to draft agreements on their own without the assistance of a lawyer.
Penny wise. Pound foolish.
Exactly.
There is another reason why you want a lawyer to help you out with this.
Not only to make sure you "understand" the term ... but also to make sure you understand how the provision might turn around and bite you in the a$$. It might not be immediately evident.
I'll give you an example:
I was friends with two partners who owned a very successful business. The majority partner wanted to sell the business. The original partners got along great. But the majority partner had much bigger things to focus on so (long short) he wanted out.
So he found a set of buyers to acquire the club.
Now here's the thing ... the new partners coming in wanted the minority partner to stay on because the new owners did not have experience running that type of business. The minority partner was the guy running the business most of the time.
So he stayed on.
Well ... long short ... the minority partner did not pay much attention to the capital contributions clause in the new sale agreement. The consequence ...? The new owners jacked up the required capital contributions ... jacked up their salaries ... and forced the minority owner to progressively sell off his ownership interest in the company ... in lieu of capital contributions ... until there was very little ownership interest left.
The new owners had deep pockets. The minority owner did not.
End result ... the minority owner ended up taking a buy-out for what was left for peanuts.
Or (more bluntly speaking) ... the new owners F*cked him over and good.
Why ...? Because although he understood the provision ... he did not understand how the capital contributions provision could turn around and bite him in the a$$.
Another reason why you need a lawyer.
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