Use of there is or there are in a sentence is not only more often than not a sign of clutter: it also allows drafters to play, presumably unwittingly, the game of hide-the-actor.
Consider the hot-off-the-presses case of Florida Department of Highway Safety and Motor Vehicles v. National Safety Commission, Inc., which a reader just told me about (PDF copy here). The litigants were party to a contract that was to terminate on December 10, 2010, except that the contract also stated as follows:
There is one renewal option for a five (5) year period.
In November 2009, the Department told NSC that it didn’t want to renew the contract; a few months later, NSC notified the Department that it was exercising its right to renew the contract. The Department refused to renew, so NSC sued. The issue? Whether NSC had the unilateral right to renew.
The lower court somehow held that NSC “possessed an unambiguous, unilateral right” to renew. The Florida District Court of Appeal disagreed, citing caselaw to the effect that the purpose of the state procurement statute—the source of the renewal concept—was to exempt the parties from competitive bidding if they both wanted to renew.
Although the pre-contract documents between the parties contained wishy-washy renewal language, the contract gave the parties an opportunity to say how renewal was actually meant to operate. But consistent with the standards of what, according to the court’s description, may have been a grubby little deal, the drafter instead opted for “there is” plus the abstract noun “option”. As a result, the reader is left without any idea who has the option.
[What follows reflects Mark Anderson’s comment below]
In some other context, the fix might have been to use a real subject and a more robust verb, changing There is one renewal option to Acme may renew. But here, as is often the case, the fix is more drastic: Because renewal isn’t unilateral, the parties could elect to renew whenever they want. Furthermore, as Mark Anderson notes in his comment, Florida statutory law specifies what the contract has to say regarding renewal.
So I propose the following fix (using bullet points because the “(1)” hierarchy isn’t available):
Any renewal of this agreement will be effective only if it satisfies the following conditions:
- the renewal (A) is in writing, (B) specifies a termination date that is no later than December 10, 2015, and (C) leaves unchanged the provisions relating to price;
- the Contractor does not charge the Department any amount in connection with the renewal;
- the Department has evaluated the Contractor’s performance and determined that it is satisfactory and the Department has notified the Contractor of that determination in writing; and
- the Department has determined that sufficient funds will be available to allow it to meet its obligations under this agreement as so renewed and the Department has notified the Contractor of that determination in writing.
But all this is to get away from my original point—that there is has the potential to create confusion.
[Below is my lame original ending]
In some other context, the fix might have been to use a real subject and a more robust verb, changing There is one renewal option to Acme may renew. But here, as is often the case, the fix is more drastic. I propose the following:
If the parties elect to extend the term of this agreement, any such extension will be exempt from the competitive-procurement requirements of chapter 287, Florida statutes.
But given that it simply acknowledges what the law provides, it could be omitted.
“Hide the actor” – great line; I’m going to steal it for my contract-drafting class with attribution, of course!
Ken: I think the majority got it right, but the opinion doesn’t emphasize the reason very well. The original invitation to negotiate identifies a term. It said: “The Contract shall be in effect for 5 years, with one (1) 5 year renewal option contingent upon satisfactory service, unless terminated earlier by the Department under the terms provided herein, subject to an annual appropriation by the State Legislature.”So far, that clearly says that the Department can decide not to renew for unsatisfactory performance. As the majority in the case said, this tracks statutory language that has previously been interpreted to mean that neither party has a right to force the other into a renewal. Both parties are held to knowledge of that, since the case that held it was in 2000, and the contract was dated from 2005. The next document in the sequence was apparently the contractor’s best and final offer, which states:“NSC will print and provide all handbooks for the 5-year contract period with an option to renew.”I read this to simply reference the term that the Department had proposed. That might be because, if I was sending in a proposal and wanted a unilateral right to renew, I would have made that much clearer than this language. Another way to think about this is that, if the language is ambiguous, it will be construed against the drafter. I don’t think this language is ambiguous because I think it references the Department’s language. But if a court was to say that the contractor’s interpretation was a reasonable one, then my interpretation must also be reasonable, and – in the absence of any other evidence – the language should be construed against the drafter. Finally, the contract comes around. The language in it is:“This contract shall begin on the 1st of July, 2005 and shall terminate on the 30th day of June, 2010 [extended by amendment to December 31, 2010]. There is one renewal option for a five (5) year period. . . . 1. The Contractor will print and provide all handbooks for the 5-year contract period with an option to renew.”Again, I read this as consistent with the invitation to negotiate and the best and final offer (assuming that it is consistent with the invitation to negotiate). I don’t know who the drafter was, but this seems like more of the same to me. So it seems to me like the majority got it right. There is language, though, that seems quite at odds with what the lower court, the majority, and the dissent all say it meant. The language is:“This Contract is governed by the terms and conditions set forth in ITN No. 002-05 with exception of the terms submitted by the Contractor’s Best and Final Offer dated April 1, 2005.”I read that to mean that the contract does NOT include the terms submitted in the BAFO. That is, “This contract is covered by [X] with the exception of [Y]” means that [Y] is not part of the contract. Maybe the parties agreed on what they had intended here. But on the face of that language, I would not have given language from the best and final offer any weight at all. Am I misreading this?Chris
Chris: I agree with your analysis. But as regards “governed by [X] with exception of [Y],” I agree with the court: I think it means that [Y] (the terms of the Best and Final Offer) is controlling. Otherwise, why bother mentioning the Best and Final Offer? Ken
Ken:
To clearly exclude it from an ambiguous term. I would have read this as an answer of “no” to the question of “does [X] include [Y]?” To get to that result, you might need the knowledge that some agencies reference all of an RFP, the responsive proposal, and subsequent negotiating documents under similar references.
Chris
Chris: I give up! The only thing that’s clear is that the drafting in this transaction was abysmal. Ken
Part of the problem seems to be using legislative drafting as a basis for contract drafting. The relevant legislation refers to a requirement for written contracts that include:
(f) A provision specifying that the contract may
be renewed for a period that may not exceed 3 years or the term of the
original contract, whichever period is longer, specifying the renewal
price for the contractual service as set forth in the bid,
proposal, or reply, specifying that costs for the renewal may not be
charged, and specifying that renewals shall be contingent upon satisfactory
performance evaluations by the agency and subject to the
availability of funds.
The detailed mechanics of the renewal term – whether either party can elect to renew or does it require the agreement of both parties – seems not to be important in the above paragraph (f). Tempting as it is for the contract draftsman to just track the language of the legislation, this results in the problems that the courts had to resolve. This temptation is made particularly strong by the use of the word “specifying” in four places in paragraph (f). It seems to me that the contract draftsman needs to address both the contractual issues, including who can renew and how, and the legislative requirements as stated above.
Ken, I share your dislike of the “there is” formula. I have the following comments about your proposed wording:
1. I don’t think it is a “provision specifying that the contract may be renewed”, so doesn’t comply with paragraph (f).
2. Even if we get over that hurdle, I would prefer to replace “elect” with “agree in writing” so as to remove any doubt over what elect means.
The disputed language was “This contract shall begin on the 1st day of July, 2005 and shall terminate on the 30th day of June, 2010. There is one renewal option for a five (5) year period.”
If I knew anything about public procurement law in Florida, which I don’t, I might be inclined to replace that wording with:
“This contract shall begin on 1st July 2005 and shall terminate automatically on 30th June 2010 (“Initial Term”), unless it is extended in accordance with the following sentence. At any time during the Initial Term, the parties may agree in writing to extend the duration of this contract, subject to the following conditions:
(i) this contract may not be extended beyond 30th June 2015;
(ii) the [Price] during the extended term of this contract shall be [ ];
(iii) the Contractor may not charge to the Department any costs associated with the renewal of this contract; and
(iv) the Department’s agreement to extend the term of this contract will be subject [inter alia] to (1) the Department evaluating and being satisfied with the performance of the Contract during the Initial Term, and (2) the Department having available sufficient funds to pay the [Price] during the extended term.
[If the parties agree to extend this contract in accordance with the previous sentence, they acknowledge and agree that any such extension will be exempt from the competitive-procurement requirements of chapter 287, Florida statutes.]”
This still leaves some questions unanswered, eg is there a standard performance evaluation process that needs to be referred to, and it is in some ways illogical – how can you stop the parties agreeing in writing without the 4 conditions – but it does try to set out a process that the parties agree to follow. Perhaps “condition” is the wrong word here, but I can’t immediately think of a better one.
Mark: No fair! You actually read the case! I was hoping to make a quick “there is” surgical strike, but you had to get all thorough on me …
So I’ve revised my post. And in the process I decided that if the contract contains a comprehensive renewal provision, it could do without mentioning the competitive-procurement requirements.
Ken
Mark:
To address the desire of the department to show that it is considering the things that the statute requires it to consider, but to avoid the illogic of attempting to condition a future agreement, you might delete item (iv) and instead say something like “The contractor acknowledges that the Department’s agreement to extend the term of this contract will depend on [list of conditions].”
Chris