When it comes to writing an email, a formal letter to a colleague, or even a text message to a friend, the ramifications are generally insignificant. However, in the context of legal drafting, mistakes, however small, can have significant financial consequences for clients. This could not have been more true than in the recent Australian case of Namrood v Ebedeh-Ahvazi and American case of O’Connor & Anor v Oakhurst Dairy & Ors.

Namrod v Ebedeh-Ahvazi [2017] NSWCA 310

In this NSW Court of Appeal case, a purchaser lost his $146,000 deposit because the seemingly interchangeable words of ‘the completion date’ and ‘by completion’ were held to have disparate meanings. The contract for the purchase of a property included a clause that compelled the vendor to comply with local council notices ‘by completion.’ The contract separately stipulated that the ‘completion date’ was 20 June 2015.

The vendor complied with the local council notices one week after 20 June 2015 and requested that the purchaser settle and complete on 29 June 2015. Dissatisfied with the evidence of the vendor’s compliance with the council notices, the purchaser sent a notice to complete to the vendor, which the vendor did not action. Subsequently, on 29 July 2015, the purchaser issued a notice of termination.

In response, the vendor served his own notice to complete on the purchaser, together with supporting documentation purporting to prove that he had in fact complied with the local council orders. By October, completion had still not occurred so the vendor served a notice of termination on the purchaser and proceeded to sell the property to a third party.

The vendor sought a declaration from the Court that the vendor’s termination was valid and that he was entitled to the forfeiture of the deposit by the purchaser. The purchaser cross-claimed for the deposit.

The issue turned on the meaning of ‘completion’ and whether this required the vendor to have fully complied with the local council notices by the defined contract completion date of 20 June 2015.

The Court found that the vendor did in fact fulfil his contractual obligations under the contract and that there was a consistent distinction in the contract between the meaning of ‘completion date,’, which was 20 June 2015, and ‘by completion,’, which was the day when title was conveyed.

As the contract required the vendor to comply with the local council notices ‘by completion’, this needed to occur on the date that completion actually occurred (and not the stipulated completion date of 20 June 2015).

Because the purchaser failed to comply with the vendor’s notice to complete, the vendor was consequently entitled to retain the purchaser’s $146,000 deposit. This decision was upheld on appeal.

O'Connor & Anor v Oakhurst Dairy & Ors No. 16-1901 (1st Circ. 2017)

Errors in drafting are not limited to lawyers;, even legislators make grammatical errors. This was recently demonstrated in the United States, when a missing Oxford comma in a Maine state law resulted in a US$5 million settlement to a group of employees. A group of truck drivers sued their employer, Oakhurst Dairy, for failing to pay four years worth of accrued overtime. The employer denied their employees’ claims and relied on an exclusion in the law.

The contested state law entitled employees to time-and-a-half after working 40 hours, except for the:

canning, processing, preserving, freezing, drying, marketing, storing, packing for shipment or distribution of:

  • agricultural produce;
  • meat and fish products; and
  • perishable foods.

The lack of a comma between ‘packing for shipment’ and ‘distribution’, created uncertainty as it was unclear whether the exemption applied to ‘packing for shipment’ and ‘distribution’ as separate and individual activities, or ‘packing for shipment or distribution’ as a single activity. The Appellate Court found the law was ambiguous and in the context of ambiguity in labour law, it should be construed to achieve the purpose of protecting employees.

Therefore, ‘packing for shipment or distribution’ was interpreted as a single activity, and because the truck drivers only ‘distributed’ and did not ‘pack’ the goods for shipment, the exemption did not apply. The workers were therefore entitled to payment for overtime.

This interpretation prompted the settlement by Oakhurst Dairy.

The legislation has since been amended to expand the exclusion by inserting an Oxford comma between ‘packing for shipment’ and ‘distribution’ so that these activities are considered as separate tasks.

Take home message

Both of these cases highlight the importance of precision in drafting and the severe financial consequences that can flow when it goes wrong. Before signing any important contracts make sure you consult your lawyer and let them sweat all of the small stuff, because as we have seen a single comma (or lack thereof) can have very significant consequences.