I’m grateful to David Gurfein, an associate in the New York office of Cozen O’Connor, for informing me of AIU Insurance Co. v. Robert Plan Corp., 14 Misc.3d 1216(A), 2006 WL 3904521 (N.Y. Sup. Dec. 26, 2006). This case considers how confusion over the distinction between that and which can result in ambiguity. (Click here for a copy of the case.)
First, some background. Garner’s Modern American Usage provides a more complete introduction to the distinction between that and which, but here’s MSCD‘s take on it:
Authorities on general English usage recommend using that for restrictive clauses and comma-which for nonrestrictive clauses.
In the sentence The cakes that George baked were delicious, the clause that George baked is restrictive, in that it gives essential information about the preceding noun (cakes) so as to distinguish it from similar items with which it might be confused (cakes baked by someone else).
By contrast, in the sentence The cakes, which George baked, were delicious, the clause which George baked is nonrestrictive, in that it gives us supplemental information that does not further delimit the meaning of the preceding noun; we are being told that not only are the cakes delicious, it so happens that George baked them. Use of which and the offsetting commas serves to tell us that the clause constitutes something of an aside.
While I was writing that section, I looked for but failed to find any relevant case law, so I was intrigued when during my recent New York seminar David mentioned that he knew of such a case, and I was pleased when he subsequently supplied the citation. So let’s have a look at the AIU Insurance case.
In this case, the court considered a motion by the plaintiffs, AIU, to reargue an order granting the defendants, TRP, a preliminary injunction. Here’s the contract language that was at issue:
All books, accounts, buyout agreements or other documents constituting, embodying, or in any way relating to the business to be conducted under this Agreement or any Predecessor Agreement, or the transactions contemplated hereby or thereby, except computer software systems, customer lists, customer and client records, and other matters relating to the marketing of LAD/CLAD business, which are the property of AGENT, are the property of the COMPANY whether paid for by it or not.
(Note that “COMPANY” means AIG (presumably one of the plaintiffs) and “AGENT” means defendants TRP.)
The court broke down the language at issue into the following components:
- Clause A: All books, accounts, buyout agreements or other documents constituting, embodying, or in any way relating to the business to be conducted under this Agreement or any Predecessor Agreement, or the transactions contemplated hereby or thereby
- Clause B: except computer software systems, customer lists, customer and client records, and other matters relating to the marketing of LAD/CLAD business
- Clause C: which are the property of AGENT
AIG argued that clause C was nonrestrictive and so did not limit clause B. The court noted the following implications:
If “which” in clause C were read as a restrictive pronoun, clause B would no longer identify the items that were owned by TRP. Instead, clause B would assume that the reader knew which items were owned by TRP and would simply carve them out from the items identified in clause A, which were owned by AIU.
In determining whether the which was restrictive or nonrestrictive, the court noted that “Strict grammarians prefer the use of the word ‘that’ as the defining, or restrictive relative pronoun, while reserving ‘which’ as the nondefining, or nonrestrictive relative pronoun.” But the court then cited authorities to the effect that many, or most, writers don’t observe this distinction, and it noted that the agreement at issue included instances of which used in place of that as a restrictive relative pronoun.
The court went on to acknowledged that “Ordinarily, a comma setting off a modifying clause indicates that the modifier is nonrestrictive,” so “a comma preceding ‘which’ in clause C would tend to suggest that ‘which’ is being used as a nonrestrictive pronoun and that clause C does not limit or define clause B.”
Nevertheless, the court denied the plaintiffs’ motion, on the grounds that TRP was likely to succeed on the merits of its position. The court noted that under New York principles of contract interpretation, “strict rules of grammar do not have the last word, when a grammatical construction of a contract is inconsistent with the parties’ intent.” The court concluded that the plaintiffs’ reading of the contract language at issue “clashes with other contextual clues of the parties’ intent.”
So what is the careful drafter to draw from this case? I’m not going to get bogged down trying to figure out who had the better of this particular argument. All that interests me is that although according to authorities on usage the which at issue in this case would seem nonrestrictive, the court read it as being restrictive. That leads me to recommend the following: Don’t use nonrestrictive clauses, and use that and not which (with or without a comma) in your restrictive clauses.
I have two reasons for recommending that you not use nonrestrictive clauses: First, widespread uncertainty regarding the distinction between restrictive and nonrestrictive clauses means that any nonrestrictive clause risks being construed as a restrictive clause, as happened in AIU Insurance. (By contrast, it would seem less likely that a restrictive clause would be construed as being a nonrestrictive clause.)
But more importantly, a nonrestrictive clause “typically gives supplemental, nonessential information.” (Garner’s Modern American Usage.) Contract prose is not a suitable place for nonessential asides—you should either tackle an issue head-on or omit it entirely.
My recommendation that you use that rather than which in restrictive clauses is prompted by the fact that if you were to use which, all that would distinguish a restrictive clause from a nonrestrictive clause is presence or absence of a comma. That’s asking for trouble.
If often find myself recommending an end run around a source of confusion as an alternative to sticking with it and hoping that a court holds your way. My recommending that you avoid nonrestrictive clauses is another example of this.