Index: plugins/arguments/term.inc
===================================================================
--- plugins/arguments/term.inc	(revision 29519)
+++ plugins/arguments/term.inc	(working copy)
@@ -43,7 +43,9 @@
 
     case 'term':
       $terms = taxonomy_get_term_by_name($arg);
-      if (count($terms) != 1) {
+
+      // $conf['vids'] is not set when the context is generated by the panel's path 
+      if ((count($terms) > 1) && isset($conf['vids'])) {
         foreach ($terms as $potential) {
           foreach ($conf['vids'] as $vid => $active) {
             if ($active == 1 && $potential->vid == $vid) {