Diagnosing an Unfortunate Verb Structure

In the recent opinion of the Delaware U.S. District Court in Racing v. T-Mobile U.S. (here), the following contract language was at issue:

VICI grants to [T-Mobile] the right to be the exclusive wireless carrier supplying wireless connectivity for the Porsche, Audi, and VW telematics programs beginning in model year 2011 with such exclusivity continuing throughout the Term of this Agreement.

Here’s what the court had to say about it, in paragraph 27 (citations omitted):

Examining section 5.8 in the context of the larger contract, it is evident that the language of that provision is “fairly susceptible of different interpretations” and section 5.8 could “have two or more different meanings.” Section 5.8 recites that “VICI grants to T-MobileUS the right to be the exclusive wireless carrier supplying wireless connectivity . . . .” Although T-Mobile contends that this is in fact language of conveyance, the phrasing is too convoluted to have any one clear meaning. From the final version of section 5.8, it is not clear if VICI has: given T-Mobile the right to go after the telematics business from the three companies; bound itself to help T-Mobile secure telematics business; or given T-Mobile some right to telematics business without the business itself. Furthermore, section 5.8 contains undefined key terms that are open to multiple interpretations. For instance, the contract does not define Porsche, Audi, VW, or from which division of these global companies VICI is purportedly giving T-Mobile business. Lastly, an examination of the rest of the contract reveals no other provisions that in any way illuminate the language contained in section 5.8.

My starting point in analyzing section 5.8 would be, of course, to ask myself what category of contract language it should be.

Using “grants … the right to be” suggests some form of language of discretion. (Regarding “right,” see this post.) But language of discretion is inappropriate when instead of granting Party A discretion to do something you’re seeking to have Party B commit to something that benefits Party A.

So I would have used either language of performance to establish some sort of relationship (“VICI hereby appoints T-Mobile”) or language of obligation to impose an obligation on VICI (“VICI shall”).

But as the court suggests, section 5.8 is inadequate in various respects, so I wouldn’t dream of attempting a redraft.

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.