When you refer to something in a contract, the meaning can vary depending on the timeframe.
For example, MSCD 13.4 and this 2009 post discuss how a contract reference to “subsidiaries” could mean subsidiaries at the time of signing or at any given time in the future. It’s best to avoid confusion over the intended meaning by making it explicit.
Similarly, MSCD 3.337 discusses how it can be unclear whether a reference to “Shares” means just shares owned on the date of the agreement or whether shares acquired subsequently are also included. Again, it’s best to make it clear which meaning is intended.
Now, thanks to a tip from the bloodhound that is Steven Sholk, we get to learn that lesson again, this time with respect to the word “client.”
Steven sent me the opinion of the Texas Court of Appeals in Alliantgroup v. Solanji (here). Alliantgroup alleged that Paradigm Partners, formed by former employees of Alliantgroup, had breached a settlement agreement by soliciting Alliantgroup clients. The lower court granted summary judgment in favor of the defendants; Alliantgroup appealed; the Court of Appeals affirmed.
Here’s the relevant provision of the settlement agreement:
Paradigm and the Individual Defendants [Solanji, Makhani, and Dhanani] shall not knowingly initiate contact with any individual or entity who was actually known by Paradigm and the Individual Defendants prior to the direct contact by Paradigm and Individual Defendants to be a client of Alliantgroup.
Here’s what the Court of Appeals had to say about the meaning of “client” as used in that provision:
[T]he Settlement Agreement uses the present tense in describing clients, indicating that Paradigm agreed not to contact entities that were clients of Alliantgroup at the time of the contact. The plain language of the Settlement Agreement does not contemplate a restriction against contacting any corporation or entity that had been a former client or potential client of Alliantgroup.
To have avoided a fight over meaning of the client, Paradigm should have added the word then to the settlement agreement: “any individual or entity who was actually known … to then be a client of Alliantgroup.”
To tie together the three instances mentioned above, I offer the following general principle:
When in a contact you refer to one or more things that pertain to a party (or anyone else, for that matter), you should make it clear whether you’re referring to those one or more things at the time of the contract or at some other time, so as to preclude the possibility of a fight over the intended meaning.