2

Company A is selling products to Company B at a highly discounted price. Part of the agreement is that Company B cannot resell the products.

Consider the following clause in a contract between the two companies:

Company B may not resell any products purchased from Company A at a discounted price.

Now consider the same clause, but with a reason provided:

In order to prevent toilets from overflowing, Company B may not resell any products purchased from Company A at a discounted price.

Suppose the 2nd clause is in effect and Company B goes ahead and turns a profit by reselling the discounted products. However, no toilets overflowed as a result of this action. Is the clause weakened (harder to enforce) due to a nonsensible reason being provided?

Obviously the "reason" is hypothetical, but I believe the question stays the same if you substitute anything in its place that did not occur as a result of the resale.

3

That would likely be treated as a preamble. These have been held in some jurisdictions to not have any weight.

For example, see Sherbrooke Community Centre v. Service Employees International Union, 2002 SKQB 101:

The preamble to a contract is nothing more than an introduction to that about which the parties have actually agreed. It puts the agreement into context. It describes the goals of the agreement. It speaks to what went before and the spirit in which agreement was achieved. On the other hand, it does not contain any promises. It does not contain any restrictions or commitments. It could be removed entirely without in any way altering that which was agreed to and set out in specific terms.

[...]

this clause in the preamble does not create or eliminate rights or obligations

Granted, the introductory phrase in your hypothetical clause is not literally a preamble, but it has the same characteristics cited in the above decision: "it describes the goals", "it does not contain any promises", "it could be removed entirely without in any way altering that which was agreed to".

If you wanted the clause to only take effect if toilets overflowed, use an alternative wording, like:

Company B may not resell any products purchased from Company A at a discounted price in a manner that causes toilets to overflow.

0

This is an ambiguity that would likely end in a lawsuit. Transactional attorneys must avoid this kind of ambiguity in order save both companies from the expense of litigation. The court would look to evidence within and possibly outside of the contract to help determine the ambiguity, but every jurisdiction is different. Look up the parol evidence rule or the four corners rule in your jurisdiction to determine how ambiguities in a contract are determined.

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