A contract term is ambiguous "[i]f more than one meaning is reasonably consistent with the contract language." Grumman Data Sys. Corp. v. Dalton, 88 F.3d 990, 997 (Fed. Cir. 1996). Ambiguity may be either patent or latent.
A patent ambiguity is "glaring"; it is so obvious from the face of the contract that it would place a reasonable contractor on notice of a discrepancy. Metric Constructors, Inc. v. NASA, 169 F.3d 747, 751 (Fed. Cir. 1999). Patent ambiguities raise an exception to the general rule of contra proferentem, which courts use to construe ambiguities against the drafter: a contractor is under a duty to attempt to resolve a patent ambiguity prior to bidding if the contractor subsequently wishes to rely upon the provision. See e.g., id., Blue & Gold Fleet, L.P. v. United States, 492 F.3d 1308, 1313 (Fed. Cir. 2007).
A latent ambiguity, by contrast, exists where a contract is reasonably, but not obviously, susceptible of more than one interpretation. In the case of a latent ambiguity, the rule of contra proferentem applies to construe the ambiguity against the drafter if the nondrafter's interpretation is reasonable, and the nondrafter relied upon that interpretation. See Turner Const. Co., Inc. v. United States, 367 F.3d 1319, 1321 (Fed. Cir. 2004); Metric Constructors, 169 F.3d at 751. The reasonableness of an interpretation is determined by ordinary principles of contract construction.
[updated September 2013; cited in JM 4-4.420]