Sunday, August 20, 2006

Boilerplate backfire

A news report last week after the ruling regarding the decision against Rogers Communications Inc. that hinged on the use of a comma (I reported on it in a previous blog post) explained, in the words of columnist Beppi Crosariol of the Globe and Mail, an "an ironic twist". Apparently, the contract was not drafted by the parties (Rogers or Aliant). According to Crosariol, it was "a boilerplate document used by all Canadian cable and telephone companies ... hammered out between the Canadian Cable Television Association and ... the former alliance of phone companies."

Personally, I don't find the fact that Rogers' problems can be attributed to the use of boilerplate language particularly ironic. So-called boilerplate language has been around for years and has been used in many contexts and has been subject to criticism by many who have tried to interpret it. Boilerplate language is often used and accepted without much thought or analysis. Indeed, much of the criticism rightly levelled against so-called legalese comes from the un-questioned use of boilerplate language, which some argue is intentionally confusing or drafted in such a way that it can be understood by few.

The twist Crosariol seems to refer to is that usually boilerplate language ends up being problematic (in terms of both interpretation and application) for those not in a position to negotiate a customized contract. In other words, boilerplate wording usually shows up in contracts that are more-or-less "take it, or leave it", like credit card "agreements", auto leases, apartment contracts, etc., where the parties do not have equal bargaining power.

In this case, presumably, the parties were sufficiently equal in terms of bargaining strength and so they could have (and clearly should have) drafted wording that properly described their intentions. In other words, they didn't need to rely on wording drafted by someone else. I realize the argument is that the contract was "standard" in the industry, but standard isn't a synonym for clear, nor does it necessarily mean that it represents what the parties have in mind. (In fact, in this case I think the wording was clear -- and the CRTC thought so too -- it just so happens it might not have properly expressed Rogers' and/or Aliant's intention.)

Boilerplate language is often used because people think it is so standard that it is somehow safe to use it. The argument seem to rest on the idea that it's been around for years and therefore it has withstood scrutiny over time. This is a dangerous assumption, since in many cases the language hasn't, in fact, been tested in a legal proceeding. So, uncritical application of boilerplate language is actually quite perilous.

As much as I'd like to dream that this case might be the beginning of the end of the use of boilerplate language, I'm sure it isn't. But, it might cause a few more to critically analyze boilerplate language with a view toward ensuring it is clear and that it expresses what the business intends.

Thursday, August 10, 2006

It's not just what you say -- it's how you say it

There's an old adage that basically says that when you're talking to someone, it's not just what you say that matters -- it's how you say it. Things like tone and body language play a big role in face-to-face communications.

Though no pithy adage comes to mind to describe how people interpret written communications, a recent Canadian Radio-television and Telecommunications Commission (CRTC) decision interpreting a section of a written agreement proves that it's not just words that matter -- rules of grammar matter too.

The contract the CRTC had to interpret was between Rogers (a large Canadian telecommunications company) and Aliant Telecom. Here's the portion of the agreement at issue:

"[the agreement] shall be effective from the date it is made and shall continue in force for a period of five (5) years from the date it is made, and thereafter for successive five (5) year terms, unless and until terminated by one year prior notice in writing by either party."

The agreement was entered into on May 31, 2002. On February 1, 2005 Aliant gave Rogers written notice and on February 1, 2006 Aliant terminated the agreement. Unhappy with the prospect of the agreement being terminated, Rogers brought the matter before the CRTC for interpretation of the provision.

Rogers argued that the agreement could not be terminated within the first five years. To make this argument, Rogers had to assert that the last part of the sentence -- the words that come after the second comma ("unless and until terminated by one year prior notice in writing by either party") -- applies only after the initial five year term.

Given that application of standard rules of grammar pretty clearly dictate a different conclusion (see Aliant's argument below), Rogers had to be a bit more creative. Rogers argued that the plain and ordinary meaning of the words resulted in ambiguity or absurdity and so the CRTC should interpret the contract by looking at the specific intent of the parties (which it argued should be determined by examining the words of the contract together with the circumstances surrounding entering into the contract).

Aliant argued that the second comma closed the clause ("and thereafter for successive five (5) year term") and so the information that followed it ("unless and until terminated by one year prior notice in writing by either party") qualified all the words preceding the comma-enclosed clause.

In other words, Aliant argued the intent was clear and the grammatical structure reflected the parties' intent. Indeed, to rub it in a bit further, Aliant added that had it been the intention to limit the right to terminate the contract only after the end of the initial five years there would have been no comma placed before the word "unless".

The CRTC found in favour of Aliant. The Commission concluded that the wording is clear and unambiguous and that "... based on the rules of punctuation, the comma placed before the phrase "unless and until terminated by one year prior notice in writing by either party" means that that phrase qualifies both the phrases ...". So, the contract could be terminated at any time by either party so long as the party wanting to terminate gives written notice one year in advance.

Clearly the CRTC's interpretation is correct. The easiest way of thinking about it is that setting off a clause in two commas is like putting parentheses around the clause, which means the information is parenthetical. Parenthetical information is additional information that is not necessary to understanding the rest of the sentence.

If you wonder whether to set off a clause in two commas, read the sentence to yourself omitting the information that you are considering setting off in commas. If the meaning of the sentence is correct (in this case, correct means "what the parties intend") without the parenthetical information -- then use two commas. If omitting the clause changes the meaning, don't use two commas and consider recasting the sentence (or perhaps splitting it into two sentences) to reflect what you mean.

In contract interpretation cases, parties often argue for the "plain and ordinary meaning" of the contract. The CRTC's decision is a welcome one for someone in my business because it makes the point that the plain and ordinary meaning is derived not just from the meaning of the words, but also from the grammar used to express the intent.

If you're interested in reading the actual CRTC decision you can find it at: