You Be the Judge! Interpreting Contract Language at Issue in a Recent Connecticut Case

The following language was at issue in a recent case before the Appellate Court of Connecticut, Loso v. Loso, 132 Conn. App. 257 (2011):

The defendant agrees to pay for one-half the cost of Sarah’s college educational expenses for a four year degree net of scholarships or grants, subject to the limitation that said cost shall not exceed the tuition for a full-time residential student at UCONN-Storrs.

Was the defendant’s liability capped at half the tuition for a full-time residential student at UCONN-Storrs, or was it capped at the full amount of that tuition? Here’s what the court said:

Contrary to the characterization by the court, we conclude that the language in the modified agreement pertaining to the apportionment of Sarah’s college educational expenses between the parties is clear and unambiguous. Because one half the cost of educational expenses at Sacred Heart University is greater than the tuition for a full-time residential student at UCONN-Storrs, there is no doubt that the cap amount applies. Nor is there any doubt that the cap amount is the cost of tuition for a full-time residential student at UCONN-Storrs. The first clause of the provision pertaining to the payment of educational expenses—”[t]he defendant agrees to pay for one-half the cost of Sarah’s college educational expenses for a four year degree net of scholarships or grants”—expressly indicates that the defendant is obligated to pay one half of Sarah’s educational expenses less scholarships and grants. The second clause of that provision, which is the source of the parties’ disagreement, provides that that arrangement is “subject to the limitation that said cost shall not exceed the tuition for a full-time residential student at UCONN-Storrs.” The defendant’s payment obligation is therefore capped at the full amount of tuition for a full-time residential student at UCONN-Storrs.

Yet, the defendant argues that the adjective “one-half” that modifies the noun “cost” in the first clause of the sentence, which determines his obligation when the cap does not apply, simultaneously modifies the noun “tuition” in the second clause of the sentence in which his payment obligation is capped. In this sense, the defendant implicitly asks us to change long settled rules of construction in order to effectuate the modification of a noun by an adjective in an entirely separate clause of the provision. Not even the most generous interpretation of the modified agreement supports the defendant’s contention that his obligation to pay his daughter’s college expenses is capped at one half of the tuition of a full-time residential student at UCONN-Storrs.

I suggest that most readers wouldn’t interpret this provision the way the court did, that instead they’d assume that “said cost” in the second sentence refers to “the cost of Sarah’s college educational expenses for a four year degree net of scholarships or grants.” That would mean that the the defendant shouldn’t have had to pay more than half of the UCONN-Storrs amount. What do you think?

This case should serve as yet another reminder that if your contracts allow for alternative meanings, even ones that aren’t entirely reasonable, you shouldn’t be surprised if a disgruntled contract party picks a fight. And you also shouldn’t be surprised if a court decides to favor the less reasonable meaning.

Here’s how I would have drafted the provision at issue to achieve the meaning sought by the defendant:

The defendant shall pay half the cost of Sarah’s college educational expenses for a four-year degree net of any scholarships and grants, up to an amount equal to half the tuition for a full-time residential student at UCONN-Storrs.

By the way, why bother saying one-half when half works just as well.

About the author

Ken Adams is the leading authority on how to say clearly whatever you want to say in a contract. He’s author of A Manual of Style for Contract Drafting, and he offers online and in-person training around the world. He’s also chief content officer of LegalSifter, Inc., a company that combines artificial intelligence and expertise to assist with review of contracts.

9 thoughts on “You Be the Judge! Interpreting Contract Language at Issue in a Recent Connecticut Case”

  1. Ken:

    I agree with your analysis. If the second clause had said “said payment,” then I would have agreed with the court’s outcome.

    I don’t agree with your proposed language. I think it is stuffing too much into one sentence. I see ambiguity in which part of the sentence (“pay” or “cost”?) is modified by “up to an amount.” I would write it as follows:

    “The defendant shall pay half the cost of Sarah’s college educational expenses for a four-year degree net of any scholarships and grants. The amount of this payment shall not exceed half the tuition for a full-time residential student at UCONN-Storrs.”Chris Lemens

    Reply
  2. I agree with the court. The cost of “college educational expenses” includes all manner of costs and expenses, and tuition is only about 40-60% of the full cost, depending on the school. To me, the defendant clearly agreed to pay for 1/2 of all of those “educational expenses”, up to a cap equal to 100% tuition. That way, if the non-tuition expenses get out of hand and exceed full tuition, the cap applies.

    Reply
    • Brad: I suggest that it’s overstating it to say that the provision expresses anything “clearly.” After all, Chris Lemens and I came to a different conclusion than you.

      And the cap includes expenses other than just the cost of classes—otherwise the word “residential” would be meaningless. If you assume that the cap includes the cost of classes, a room, and food—I think it’s a safe assumption—it would be bizarre for the defendant to in effect say that it was willing to pay double the UCONN-Storrs costs.

      Even if you assume that the UCONN-Storrs amount represents only the cost of classes, it would be odd to use it as a way of expressing a cap on all costs.

      And finally, the above points reinforce the powerful semantic argument—the equivalence of cost in both parts of the sentence.

      Ken

      Reply
  3. I agree this provision is not at all as clear as it should have been.  However, I think “said cost” could reasonably be read to refer to “one-half the cost” — one half of the cost is also a cost, right?  In other words, I think it equally reasonable to say that the cap applies to “one-half the cost”. 

    I also think, perhaps most frighteningly for the plaintiff, that there is a plausible, albeit probably not a “winning”, argument that the limitation language could even be a condition to the defendant’s obligation to pay the tuition.  In other words, 1/2 the cost is reimbursed *only if* the “cost” is less than or equal to the UConn tuition.  If the “cost” is more than the UConn tuition, then the limitation could *exclude* the defendant’s obligation to reimburse.  Naturally, the reason this is not a winning argument is that you would expect to see stronger conditionality (i.e., not “subject to the limitation”, but “subject to the condition”; or some form of “if only” type language formulation).  But these dangling interpretations militate strongly for Ken’s much-improved language.

    Reply
    • Eddie’s second point is interesting, and the “conditionality” interpretation actually seems stronger if the “cost” refers to the full cost of the UConn tuition rather than the payment required. While it is clumsy to express a condition by saying that the cost of Sarah’s college expenses “shall not exceed” the UConn tuition costs, the language makes almost no sense if the idea is to just cap the payment.

      I have a suspicion that the court here was seeking to do justice for the student in any case, and found a way to get the result it wanted. If so, it is conceivable that the concern over conditionality had some influence in leading them to this conclusion – better the father pays double than nothing.

      Neverthless, for the record, my clear thought on a first reading was that the “cost” referred to the full cost of Sarah’s tuition, and that the payment was capped at half the UConn fees.

      Reply
  4. I agree with the court’s ruling. The stated intent was to pay half. If the individual went to a less expensive school it would be half that amount.
    by going to a more expensive school, the half is capped by the limitation. The limitation did not say half the tuition at UCONN so the court needed to follow the clear intent of the parties which was to pay half subject to that financial limitation.

    For a maximum period of four years, Defendant shall pay no more than half the tuition for a full-time residential student at UCONN-Storrs for Sarah’s college education. If the actual cost of Sarah’s tuition is less than UCONN-Storrs, the maximum payment shall be
    half the actual amont paid net any scholarships or grants.  
    .

     

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  5. I agree with the Court. “Subject to the limitation” is crucial – clearly (and I use that word consciously), the defendant cannot attempt to cap  Sarah’s college’s fees based on UCONN-Storrs’ full time residential fee; what he could cap is his own payment. Further, it is reasonable to proceed on the basis that the parties were alive to the comparative fees and knew that Sarah’s college was more expensive than UCONN-Storrs – there is some support for this even from the small extract of the judgement provided above. And, the argument that Mr Walker puts forth in his second para occurred to me as well – not agreeing with the court’s reasoning, could lead one to the conclusion that the defendant shall not be liable to pay any amount if half of Sarah’s college’s fee exceeded UCONN-Storrs’ full fee.
         By the way, I don’t think the court reached its conclusion in order to help the student (though it would be unreasonable to presume that that angle  never occurred to the court). Plainly, the court was convinced of its reasoning in law and never saw the need to resort to equity. 
         One issue none can disagree with is that the clause could have been worded better – how about “The defendant shall pay towards Sarah’s education, the lesser of the following amounts : (a) half of UCONN-Storrs’ full time fee, (b) half of Sarah’s college’s fee (net of blah, blah..)”  to achieve the meaning sought by the defendant ?

    Reply

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