Question

Example of a financial institution that experienced financial loss because of ambiguous language in a loan policy

Answer 1

This is a case law on the term ambiguity.

Frigaliment Importing Co. v. B.N.S. International Sales Corp

gets embroiled in the definition of a chicken. Buyer, a Swiss company, has ordered frozen eviscerated chickens from a New York wholesaler of poultry. The order called for chickens of two sizes: 1 ½ - 2 pounds, and 2 ½ - 3 pounds. When the shipment arrives in Europe, Buyer discovers that the larger birds are all stewing chickens. Expecting broilers and fryers, Buyer cries "foul" and brings suit against Seller for breach of contract. The issue before the court becomes: "what is chicken?" 4 The plaintiff buyer contends that "'chicken' means a young chicken, suitable for broiling and frying."5 The defendant insists that a chicken is "any bird of the genus that meets contract specifications on weight and quality, including what it calls 'stewing chicken'."6 Judge Friendly, who heard the case, concedes that both meanings are possible. Consequently, he declares that "the word 'chicken' standing alone is ambiguous " (emphasis added),7 and he decides to look to the contract to see whether it offers any aid for the interpretation of this word.