Well, the problem is - how long is a month? It can be 28, 29, 30 or 31 days in length, and because of this variation you can also get variable results. As you indicated at the end of Option 1, 30 is an imprecise divisor (a better one would be 365.25/12, or 30.4375, but this will not always produce the correct answers if you are counting calendar months).

If your contract goes from 31/01/2012 to 29/02/2012 (29 days) is this one complete month? One would expect so, but if it goes from 31/01/2013 to 01/03/2013, (also 29 days) then what would be the answer here?

How long is a piece of string ?

Pete