As lawyers and drafters of contracts, our stock in trade is words, and we become verbal architects, carefully spanning nouns and adjectives with conjunctions to create a construct of conditions and terms used to regulate the commercial interaction between two or more parties. Careful consideration must be given to each word used in a contract and how its meaning is intended to be construed by the parties. We become aspiring grammarians, agonizing over the portent of words and the nuances of commas, colons and apostrophes. There are flurries of e-mail exchanges between lawyers regarding the placement of a semicolon or whether terms are disjunctive or conjunctive. On occasion, the interpretation of an errant comma could decide whether franchise fees are inclusive or exclusive of a given amount. In Coyote Portable Storage, LLC v. PODS Enterprises, Inc., 2011 WL 1870593, (N.D. Ga.), a case involving a contractual dispute between franchisor and franchisee, the defendant PODS filed a motion to extend the discovery period in order to introduce the testimony of an expert witness to opine as to the correct grammatical interpretation of the placement of a comma.
PODS wanted to introduce the testimony of its expert witness, a lawyer who also happened to be a grammarian and an advanced legal drafting professor, regarding the meaning of a comma in determining the meaning of “Net Sales,” which was defined in the contract as “the total revenue as shown on the Sales by Item Summary – Complete Summary, excluding sales tax and insurance as explained above, less discounts, credit memos or adjustments and bad debt expenses, and monies received as part of the cross country move program, which are distributed separately on a monthly basis and not included in this summary.” At issue in the case was whether Net Sales included monies received as part of the cross country program. Coyote contended that the language, when read, meant that monies received as part of the cross country move program should not be included in the Net Sales. PODS, through its expert, would try to assert that the correct grammatical interpretation included monies received as part of the cross country program.
In its opinion on PODS’ motion, the court ruled that the expert witness for PODS overstepped his role by giving testimony on the legal effect of a patent ambiguity in a contract. The court, in a somewhat admonishing tone, explains further that instead of limiting expert testimony to the syntactic interpretation of a sentence, PODS applies noscitur a sociis, a role reserved for the judge. Noscitur a sociis, literally translated, means “a thing shall be known by its associates.” When used in a legal setting, it means that the ambiguity created by a word or phrase shall be determined by its association with other words within the context of a phrase. Our mothers warned us about the company we keep, and now we know that it applies to our words as well.
Under Florida law (the applicable jurisdiction for this case), contractual ambiguity is a matter of law, to be resolved by the judge. Or wait—is it a matter of law to be resolved by the judge? In any case, contracts between franchisors and franchisees should be drafted and reviewed carefully, taking into consideration the meaning of each relevant word and the context of the agreement as a whole. Form contracts that one party declares is “standard” for all of its transactions deserve extra attention to ensure that the terms are applicable to each party. While this is a painstaking process, the effort is a worthwhile investment as it could well keep you from wondering about the company your words keep.