Contract Mischief: Sometimes Big Trouble Comes in Small Packages

The words “and” and “or” are language landmines for the unwary. “And” is the third most frequently appearing word in the English language prose. “Or” is less common, but still in the top 50. Both are conjunctions – establishing relationships among other sentence components.

Their meanings are simple, but their role in a sentence is deceptively subtle, complex, and potentially mischievous.

And

“And” can play the role of a conjunctive (apples and oranges [together]), or it can serve as an inclusive disjunctive (apples and oranges, meaning apples [or else] oranges [or else] both).

For another, perhaps more intuitively accessible, example, consider the sentences:

I like bourbon and water.

I like beer and wine.

The word “and” is used to very different effect in each.

In the first sentence, “I like” applies to “bourbon and water” together, whereas in the second sentence, “I like” applies to each of “beer” and “wine” separately. Stated differently, the preceding words “I like” are distributed over the conjoined elements in the second sentence, so that the meaning is “I like beer and [I like] wine.” But the preceding words are not distributed over the conjoined elements in the first sentence, so that the meaning is “I like (bourbon and water).” In each sentence, the word “and” has the same conjunctive meaning—the difference lies in whether the preceding words are distributed over the conjoined elements or not. Whether to interpret the preceding words as distributed over the conjoined elements or not depends on the context of the sentence and what we externally know about the conjoined elements. Given what we know about the cultural context, and what we know about bourbon, water, beer and wine, the meanings of the two sentences are not at all ambiguous.

Or

“Or” can be an inclusive disjunctive (apples or oranges [or both]), an exclusive disjunctive (apples or oranges [but not both]), or a complicative (Honeycrisps or apples, meaning Honeycrisps or [to use another term] apples).

So what do you suppose the creditor meant in this covenant in a security agreement?

Grantor will not do or fail to perform any act whereby any of such Patent Collateral may lapse or become abandoned or dedicated to the public or unenforceable.

What is it that the grantor “will not” do? Or fail to do?

In this instance, the addition of a couple of words adds clarity:

Grantor will not do any act or fail to perform any other act whereby any of such Patent Collateral may lapse or become abandoned or dedicated to the public or unenforceable.

If, in your drafting, you are not on the alert for the mischief these words can work, you run the risk of creating an ambiguity, which an important rule of construction provides will be construed against your interest as the drafter who created the issue.

Sometimes, you will be saved by cultural context or industry convention. Sometimes it will be another rule of construction that saves the day – when the language of a contract is susceptible to two constructions, one of which renders the contract fair, customary, and such as a prudent person would naturally execute, while the other makes it inequitable, unusual, or such as a reasonable person would not be likely to enter into, courts will prefer the interpretation that results in a rational and probably enforceable contract.

A $5.8 Million Lesson

To peel another layer from this onion, sometimes “or” has another meaning – as in when the list it controls is preceded by “after the latest of...”

This was the language at issue in a Stipulation and Order in the first E. Jean Carroll v. President Donald J. Trump case tried in the Southern District of New York. The verdict in favor of Ms. Carroll in that case resulted in an order requiring the defendant to post $5.55 million with the Court to secure payment of the judgment plus interest, pursuant to an order staying enforcement pending appeal. The Stipulation and Order provided, in relevant part, that Ms. Carroll could collect any moneys owed by President Trump to Ms. Carroll under the terms of the judgment, inclusive of interest, as may be modified on appeal or court order . . .

“After the latest of (a) the mandate issued by the Second Circuit in connection with the Appeal; (b) a denial of a timely filed petition for writ of certiorari to the Supreme Court (if any) in connection with the Appeal; or (c) upon the Supreme Court’s granting of certiorari, an order of the Supreme Court in connection with the Appeal . . .”

With the addition of “after the latest of,” the function of “or” is shifted from its common disjunctive role to mean that each of the items in the list must be satisfied (or rendered impossible) before the associated consequence will be triggered.

In this case, that consequence was Ms. Carroll’s petition to release to her the posted funds plus interest, the total amounting to approximately $5.8 million, over President Trump’s objection.

Ms. Carroll argued that the three-pronged section of the stipulation amounted to a disjunctive series of events, wherein one condition being met would allow the verdict award to be unlocked and paid out.

President Trump argued, conversely, that the language quoted above is a conjunctive series of events, permitting collection only after all three actions occurred. In particular, the defense argument was that although denial of the petition for cert had occurred, it was not a final denial because President Trump had petitioned the Supreme Court for rehearing on his petition for cert.

The District Court decided the issue in favor of Ms. Carroll, not based on a reading of “or” as disjunctive or conjunctive, but because President Trump’s reading of subpart (b) relied heavily on the implication that denial of cert must be “final,” a word that did not appear in the language of the stipulation, which the District Court was unwilling to read in for the parties.

Conclusion and Parting Thought

So, be careful out there. Be sure you write what you mean and mean what you write, lest some tribunal be called upon to closely parse what you wrote with more care than you used in writing it.

Finally, as pernicious as “and” and “or” can be on their own, the combination “and/or” is particularly troublesome and has been referred to by one judge as that “Janus-faced verbal monstrosity.” Find another way to say what you mean, even if it means adding a few more words.