Contra preferendum or contra preferentem is the rule in contract law that is applied when interpreting a clause, especially an exclusion clause, in an action that says that, where ambiguity as to a term's meaning exists, it should be read against the party who wrote it. That is, the preferred interpretation will be the one that helps the party who drafted it the least. A contract is a promise or an agreement that is enforced or recognized by the law. ... An exclusion clause is a term in a contract that seeks to restrict the rights of the parties to the contract. ... In the law, a cause of action is a recognized kind of legal claim that a plaintiff pleads or alleges in a complaint to start a lawsuit. ...

The reasoning behind this rule is to encourage the drafter of a contract to be as clear and explicit as possible and to take into account as many foreseeable situations as they can.

Additionally, the rule manifests the court's inherent dislike of standard-form contracts (pre-made contracts that are universally disseminated e.g. standard form all club members must sign). The court perceives such contracts as displaying an unfair or uneven bargaining position - the balance of power lying with the drafter of the contract. To compensate for this, the court applies contra proferentem to take a strict approach and at times, striking down the terms to the favour of the other party.

Contra Preferentem also places the cost of losses on the party who was in the best position to avoid the harm. This is generally the person who drafted the contract. An example of this is the insurance contract, a great example of the contract of adhesion, above. There, the insurance company is the party that is completely in control of the terms of the contract and is generally in a better position to, for example, avoid contractual forfeiture. the first known case, which gave rise to the contra proferentem rule is Hollier v Rambler Motors (1972)