When Contracts Look to Dictionaries

At an in-house seminar in Moncton, New Brunswick, yesterday—hi, guys!—one of the participants mentioned that he had seen a contract in which it was stated that all undefined terms were as defined in the Oxford English Dictionary.

Of course I found an example of that provision on EDGAR:

[T]erms not defined in this Development Agreement shall have the meaning ordinarily ascribed to them in the Oxford English Dictionary (Second Edition).

And here’s another like it (I particularly like the bit about “no secret or code words”):

All words, unless otherwise specifically defined in this Agreement, shall have their ordinary meanings as set forth in any dictionary of American English in common usage; there are no secret or code words.

This seems like a hopeless notion. Just as one should be afraid when judges reach for a dictionary (see this 2011 post), it wouldn’t be promising for a contract party to do so. As I say in my 2011 post, “Seeking to attribute meaning to basic words divorced of any context is a recipe for semantic disaster.”

I also found on EDGAR contracts that state that a dictionary is to be used with respect to specific terms:

EMPLOYEE shall not make any disparaging comments, whether oral, written or via any web-based or social media vehicle, to any third person or party about CUBIC, any of its executives or employees, or its products or services, as the term “disparage” and “disparaging” is set forth in any dictionary of English or of law.

EXCEPT WITH RESPECT TO THE INDEMNIFICATION PROVIDED HEREUNDER, CLAIMS OF PATENT INFRINGEMENT, OR BREACHES OF CONFIDENTIALITY, NEITHER PARTY SHALL BE ENTITLED TO RECOVER FROM THE OTHER PARTY ANY SPECIAL, EXEMPLARY, CONSEQUENTIAL, INDIRECT, OR PUNITIVE DAMAGES (AS SUCH TERMS ARE DEFINED IN BLACK’S LAW DICTIONARY, SIXTH EDITION) IN CONNECTION WITH THIS AGREEMENT OR ANY LICENSE GRANTED HEREUNDER.

Regarding the first extract, it’s hard to imagine that a court would agree to be limited to what a dictionary says when it comes to understanding a legal term of art as basic as disparage.

Regarding the second extract, consulting Black’s Law Dictionary isn’t about to sort out the hellacious mess that is this sort of limitation-of-liability provision. For one thing, the drafter evidently didn’t consult it, as they were unaware that the terms special damages and consequential damages are synonyms. And good luck figuring out from a dictionary how indirect damages relate to consequential damages. But the bigger issue is that a dictionary won’t help in determining into what bucket any given damages fall. For more on all this, see this 2010 post.

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.