Even More on “Termination”

In this recent post, I discussed a case in which the word “termination” was held not to apply to “expiration” of a contract.

Thanks to reader, I learned about a case, Olympus Ins. Co. v. Aon Benfield, Inc., No. 11-CV-2607 (D. Minn. March 30, 2012), in which the court came to essentially the opposite conclusion, due to nuances of contract language. (Go here for a copy of the opinion.)

A provision of the contract between Olympus and Benfield referred to “any decision by [Olympus] to terminate or replace Benfield as its reinsurance intermediary-broker for any portion of the Subject Business.” The court held that this provision applied to Olympus’s decision not to renew the contract with Benfield.

The court’s decision makes sense, but this case has to be considered a less-than-ideal outcome for Benfield, at least with respect to this part of the dispute—prevailing in litigation is a distant second to avoiding litigation entirely.

To preclude any debate over this issue, the drafter should have used consistent terminology, by using the word “termination” or “terminate” in all contexts or adding “not renew” to the provision quoted above, or by citing appropriate section numbers.

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.

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