Deciding what label to apply to a particular source of uncertainty in contract language can be challenging.
A case in point: In this 2010 post and this 2007 post on AdamsDrafting I discuss disputes regarding whether a provision that refers to something in the singular also encompasses the plural. I discuss that phenomenon further in this March 2012 post and lump it with one of my favorite topics, ambiguity relating to “the part versus the whole.”
But yesterday I decided that it instead represents a different kind of ambiguity. And then today I decided that instead of causing ambiguity, it’s the result of a drafter’s failure to address an issue. That’s a category of uncertainty that, following up on this 2011 post, I just added to the six other kinds of uncertainty discussed in MSCD chapter 6.
Here’s my new account of the singular-or-plural issue, revised to reflect my adjusted taxonomy:
Whether Singular Means Plural
One kind of failure to address an issue is uncertainty regarding whether a reference in the singular also applies to the plural. (In some respects it’s the obverse of ambiguity of the part versus the whole.)
This kind of uncertainty isn’t a function of ambiguity, because only one meaning is conveyed. Instead, the uncertainty derives from not knowing whether the drafter omitted the plural so as to exclude the plural from the scope of the provision or because the drafter hadn’t spotted the issue or thought it unduly pedantic to include the plural.
One example of this uncertainty was featured in Coral Production Corp. v. Central Resources, Inc., 273 Neb. 379 (Neb. 2007). The contract provision at issue stated that a preferential right to purchase certain oil and gas assets wouldn’t apply if “substantially all of the assets and/or stock of the selling party is sold to a non-affiliated third party,” The party seeking to invoke the preferential right contended that sale of the oil and gas assets didn’t fall within that exception because the assets had been sold to more than one nonaffiliated person. The court found in favor of the party that had sold the assets, holding that the exception applied to sale to more than one person.
Similarly, ION Geophysical Corp. v. Fletcher Int’l, Ltd., CIV.A. 5050-VCP, 2010 WL 4378400 (Del. Ch. Nov. 5, 2010), concerned whether a party to a stock purchase agreement could issue more than one notice under a procedure that would allow that party, under certain circumstances, to increase the total number of common shares into which it could convert preferred shares. The provision in question used “notice” in the singular. After analyzing, none too convincingly, use of “notice” with the definite article the and the indefinite article a, the court held that the provision was unambiguous—the parties had intended that more than one notice could be issued.
But what the courts held in these disputes is less relevant than how the disputes could have been avoided. Whenever you’re drafting a provision that refers to a thing or an unnamed person, consider whether you want that provision to apply (1) regardless of the number of things or persons, (2) only with respect to one thing or person, or (3) only with respect to more than one thing or person. More often than not, the first meaning is the one you’ll want to convey. In that case, make it explicit. Whoever drafted the language at issue in Coral Production could have accomplished that by using the phrase one or more, as in “one or more non-affiliated persons.” By contrast, to fix the language at issue in ION Geophysical the drafter would have had to have added another sentence.
Don’t rely on a provision specifying drafting conventions to ensure that some other provision applies regardless of the number of things or persons. For one thing, such provisions specifying drafting conventions are clumsy. Furthermore, you can’t assume that a provision specifying drafting conventions would be enough to prevent a fight over over singular versus plural, For example, the contract at issue in Coral Production featured just such a provision specifying drafting conventions.