The question of what a contract means usually arises when one of the parties to a contract realizes, after the fact, that the other party has a different understanding of the meaning of a key contract provision.

Let's illustrate the problem:

"A" Company enters into a patent licensing agreement with "B" Company, the owner of the patent. A key provision of the license states that "A". with the prior written approval of "B', shall have the right to bring suit against third parties for infringement of the patent and shall be entitled to join "B" as a party in any such suit."

"A" Company sues "C" company and two of "C's" directors for alleged patent infringement. "B" Company's approval to sue "C" was not obtained by "A" - and when "B" objected to the suit against "C", "A" though its attorneys said, "your written approval is not required."

That's it. "A" says that "B's" written approval to sue a third party "C" is not required. Yet, the contract language is clear: "B's" written approval is required before "A" can sue "C". Nevertheless, "A" sues "C" and two of "C's" directors and denies that "B's" prior written approval is required. And, now "B" is suing "A" for breach of contract et al. Legal fees are mounting, depositions are scheduled, the business activities of "B" and "C" are disrupted, and no end is in sight to the legal wrangling which will likely go on for months.

Why would "A" deny that "B's" approval was required? When does a contract mean what it says? Sometimes it's hard to know the answer to this question. In the final analysis, a contract provision will mean what a court says it means - at potentially great expense - unless you prepare to avoid such contractual "interpretation" lawsuits.

What can be done to avoid disruptive contractual disputes? While there are no guarantees, we recommend the following prevention step. Discuss each and every provision of your agreement with the other party. Don't ignore any provision because you've been told it's boilerplate. Ask yourself these questions:

• Do I understand each and every provision of the contract?
• Is each provision stated clearly in language each party understands?
• Am I convinced that the other party and myself are able to perform our respective obligations?
• Does my contract contain an alternative dispute resolution provision to avoid lawsuits?