Thanks to Dan Schwartz (aka @danielschwartz), I learned of this Connecticut case.
It involves an employment agreement between a town and one if its employees. The language at issue included the following:
Based upon the annual performance evaluation, and at the [m]ayor’s sole discretion and recommendation, the base salary may be increased on July 1 of each fiscal year, subject to the approval of the [council], which by Charter fixes the salaries of all mayoral appointees.
The court held that under the contract, the town could not decrease the employees salary. Although of course the court doesn’t say so, what prompted it to reach that conclusion is what MSCD refers to as “the expectation of relevance.” Here’s the relevant part of MSCD (3.144–47):
A grant of discretion to do one thing doesn’t necessarily equal a prohibition against doing other things. If a mother tells her son that he may play video games, it wouldn’t necessarily follow that she’s thereby forbidding him from engaging in any alternative activity.
But the presumption that a grant of discretion doesn’t also entail prohibition comes up against what this manual refers to as “the expectation of relevance.” (Relevance is a principle of linguistics. According to The Cambridge Grammar of the English Language, at 38, “A central principle in pragmatics . . . is that the addressee of an utterance will expect it to be relevant, and will normally interpret it on that basis.”) The more specific a grant of discretion is, the more likely it is that the reader would conclude that the discretion is limited—otherwise there would be no point in being so specific. And the more likely a court would be to invoke the arbitrary principle of interpretation expressio unius est exclusio alterius—the expression of one thing implies the exclusion of others.
Consider the sentence Acme may sell the Shares to Doe. It may be that the parties had in mind that Acme could sell the shares to anyone—they addressed sale to Doe explicitly simply because for some reason it otherwise would have been uncertain whether Acme could sell the shares to Doe. But the expectation of relevance suggests that if the parties mentioned only Doe when authorizing Acme to sell the shares, it’s because Acme was precluded from selling the shares to anyone else.
To avoid any uncertainty regarding the expectation of relevance, be explicit as to whether discretion is limited. If Acme has unlimited discretion to sell the shares, it would be preferable to say Acme may sell the Shares to any Person, including Doe. If its discretion is limited, it would be preferable to say The only Person to whom Acme may sell the Shares is Doe. Or you could use language of prohibition—Acme shall not sell the Shares to anyone other than Doe.
It follows that if I had drafted the contract at issue in this dispute, I would have made it clear whether the town could decrease the employee’s salary.
(Go here for my 2012 blog post about another dispute involving the expectation of relevance.)
5 thoughts on “Connecticut Case Features “The Expectation of Relevance””
Really interesting point. Here’s a related question: What if the agreement were SILENT as to whether you could increase or decrease the salary. What then?
If the contract states the employee’s salary, then any change would require amendment, although I imagine that the employee wouldn’t object to an increase …
It’s hard to imagine why this wouldn’t be a classic illusory consideration issue since it doesn’t flow both ways. Presumably, the consideration for performing the work in an employment contract is having fixed the compensation. There is a case I use in a business law class that demonstrates that point in connection with an arbitration provision that binds the employee but can be unilaterally changed by the employer. Heye v. Am. Golf Corp., 134 N.M. 558.
I’m with Krumhorn on this. An employer having a unilateral right to increase or decrease an employee’s salary in an employment contract seems no different that Acme having the right to increase or decrease the price of its widgets in the middle of a contract term. Such a right would make the contract illusory. Am I missing something?