Tony enters into a contract to rent a car from YYZ Inc. When Tony arrives to pick up the car, he signs YYZ's standard form rental contract. One of the provisions of the contract states that if the vehicle has any mechanical problems, YYZ will cover the full costs of the necessary repairs.

While Tony has the car, the car blows a tire and the tire has to be replaced. Tony tells YYZ about the tire, expecting that YYZ will cover the cost of replacing the tire. From Tony's perspective, a blown tire is a mechanical problem. But YYZ disagrees. It says that "mechanical" means "stuff under the hood", and that a blown tire does not fall within the scope of a "mechanical problem".

Ultimately, the dispute between Tony and YYZ goes to court. The court reviews the contract and makes a determination that the term "mechanical problems" is ambiguous. Based on these facts, whose interpretation of the contract will the court adopt and apply and why?

In your answer, make sure you answer the following:

Whose interpretation of "mechanical problems" will the court adopt: Tony's or YYZ's? -- 1

What legal rule or principle will guide the court's determination? State the principle or rule. -- 2

Explain how the principle you have identified would apply to the facts in this case. Don't just state your conclusion. Give the reasons why the application of the principle you identified in B to the facts of this case leads to the answer you gave in A. -- 2