By Paul Emanuelli

This article is an excerpt from The Art of Tendering: A Global Due Diligence Guide, which is available for purchase.

This section discusses how the following seven interpretive principles can help you enhance the structure and content of your procurement documents:

  1. The Entire Document Rule
  2. The Express and Implied Terms Rule
  3. The Expressio Unius Rule
  4. The Class Rule
  5. The Association Rule
  6. The Ranking Rule
  7. The Contra Proferentem Rule

1. The Entire Document Rule
The entire document rule, which recognizes that a document needs to be interpreted as a whole, is both the most basic and most important principle of legal interpretation. As Bennion notes in Statutory Interpretation:

An Act or other legislative instrument is to be read as a whole, so that an enactment within it is not treated as standing alone but is interpreted in its context as part of the instrument.

According to this principle, a specific provision should be interpreted within the context of the entire document. When the precise meaning of a provision is in doubt, the interpreters will often look for clues in the remainder of the document. This raises a significant risk to drafters, since the meaning of a specific clause may be affected by other text in the document. Therefore, drafters should always be conscious of the overall content of their documents. This is no easy task, particularly when the various components are concurrently written by different authors and are then hurriedly assembled to meet a fast-approaching deadline. The entire document rule therefore calls for a great deal of co-ordination when structuring and drafting your procurement documents.

For example, in its July 1995 Re R.E.D. Electronics Inc. determination, the Canadian International Trade Tribunal relied on the entire document rule to deal with an interpretive dispute over a Canadian Department of Finance Request for Proposals (RFP) for network hub systems and relating cabling and maintenance services. The complainant alleged that the government awarded the contract to a non-compliant competitor. The dispute revolved around the meaning of a complex mandatory technical requirement. In determining the meaning of that requirement, the Tribunal noted the following principles of interpretation that applied to the RFP:

To assist in interpreting these essential requirements, the Tribunal has adopted generally accepted principles for the construction and interpretation of contracts. In particular, the Tribunal has taken the view that the various parts of the specification are to be interpreted in the context of the intentions of the Department and bidders, as evidenced from the RFP as a whole, and that any apparent inconsistencies between different requirements of the specification are to be resolved by finding an interpretation that can reasonably give meaning to each of the requirements of the specification. The Tribunal has also taken the view that the essential requirements of the specification should not be interpreted in an isolated and disjunctive manner, but that they should be interpreted as a whole with consideration of the overall purpose and objectives of the RFP.

As this passage illustrates, if a particular provision is unclear when read in isolation, it will be interpreted with recourse to other parts of the document. This means that drafters need to ensure consistency across their procurement documents to ensure that contradictory components are not knocking the intended meaning out of alignment.

The entire document rule affects the drafting and interpretation of specific words in a legal document. The assumption is that the drafter will use the same word when the same meaning is intended and a different word when a different meaning is intended. Bennion elaborates on this concept in Bennion on Statute Law:

It is presumed that a word or phrase is not to be taken as having different meanings within the same instrument, unless this intention is made clear. Where the context shows that the term had a particular meaning in one place, it will be taken to have that meaning elsewhere.

A term or phrase may come with baggage that is inadvertently inherited from another part of the document. You therefore need to choose your words carefully, which can be particularly challenging when the document you are assembling has multiple authors. One way to address this is to divide the documents into parts. The segregation of content into discrete schedules, while not necessarily a complete answer, can help contain the risk of inadvertently skewing the meaning of a term in one part of a document by using it inconsistently in another part.

Just as the same word or phrase is assumed to carry the same meaning throughout the document, the entire document rule also assumes that the use of a different term implies a different meaning. As Bennion states in Bennion on Statute Law:

It is presumed that the drafter did not indulge in elegant variation, but kept to a particular term when he wished to convey a particular meaning. Accordingly, a variation in a term used is taken to denote a different meaning. Blackburn J said in Hadley v. Perks (1866) LR 1 QB 444, 457:
It has been a general rule for drawing legal documents from the earliest times, one which one is taught when one first becomes a pupil to a conveyancer, never to change the form of words unless you are going to change the meaning.
In the same place however Blackburn recognized the possibility of elegant variation when he said that the legislature “to improve the graces of the style and to avoid using the same word over and over again” may employ different words without any intention of changing the meaning. It can only be said that this is bad drafting. Making use of pronouns when safe, the drafter should otherwise stick to the same word. Graces of style are all very well, but in Acts of Parliament they take a far second place to certainty of meaning.

2. The Express and Implied Terms Rule
Leaving things unsaid can be risky business in a contract. At the same time, we constantly strive for brevity to help limit the length of procurement documents. This tenuous balancing act is based on a number of interpretive principles.

One principle, which is often implicitly assumed by the trained drafter but overlooked by the untrained eye, is referred to as the technique of ellipsis. This can be roughly translated to mean “reading between the lines” or “it goes without saying.” As Bennion explains in Bennion on Statute Law:

One instrument used in the legislative drafter’s everlasting pursuit of brevity is the technique of ellipsis. A passage will be shorter if you omit to state the obvious. That can be left to be inferred. But what seems obvious to the drafter, skilled and experienced in statute law, may not be obvious to the statute user. Hence doubt arises.

This risk is not limited to statutes or to the drafting done by lawyers. Many technical experts often assume that they are writing for a trained audience and that some of the details can be left unsaid, since everybody will know what they mean. Unfortunately, the audience often includes uninitiated readers who require a greater degree of detail to understand the meaning of the technical content. For those audiences, it may not be clear what information should be read between the lines. This can sometimes leave significant gaps of uncertainty over fundamental issues. Finding the right balance in your drafting is an art, rather than an exact science. Understanding the interpretive principles of implied terms and then putting them to use can help you strike the right balance between brevity and precision.

As Bennion notes, the technique of ellipsis has evolved to help us “read between the lines” of legal documents:

Effect may be given to unexpressed words in one of three reasons. The first is that it is a known and accepted practice to treat the words as implied: they are there by operation of law. The second reason is that the implication arises as a matter of grammar or syntax from the words that are expressed. The third reason is that the implication arises from the legal or political context of the Act.

The same considerations of operation of law, of inherent meaning contained within expressed terms, and of interpretation based on context apply to the interpretation of contracts also.

The outcome of litigation often depends on what can be read in as the presumed intention of the parties. As Geoff R. Hall notes in Canadian Contractual Interpretation Law, the common law has adopted and developed a number of interpretive principles to help inform the application of implied terms:

Meaning starts with the words used by the parties, but the interpretive process goes beyond those words to give context and preclude a sterile reading of those words from causing a result which fails to comport with what the parties really intended. At the same time, interpretation cannot depart so radically from the words chosen by the parties as to change the deal they have struck. This is because going beyond the words chosen by the parties to further their mutual intentions is an appropriate contextual means of reading a contract, whereas going beyond the words to substitute the intentions of reasonable parties for the actual parties is not.

The analysis of implied terms leaves a fair amount of room for debate over the presumed intention of the parties. The Supreme Court of Canada’s April 1999 decision in M.J.B. Enterprises Ltd. v. Defence Construction (1951) offers a leading example of the delicate interplay between express and implied contract terms within the context of the tendering process. In this case, the Supreme Court of Canada resolved a dispute involving the acceptance of a non-compliant tender.

The case came down to an analysis of a clause that stated, “the lowest or any tender shall not necessarily be accepted.” The issue revolved around the extent to which the defendant purchasing institution, Defence Construction, could rely on its “privilege clause” to award a contract to a non-compliant bidder. The unsuccessful plaintiff bidder, M.J.B. Enterprises, argued that the privilege clause did not permit this and maintained that the implied terms of the tendering process compelled the purchaser to award to the lowest compliant bidder.

The Supreme Court determined that the privilege clause gave Defence Construction some latitude to bypass a compliant low bid in appropriate circumstances, but it did not permit the acceptance of a non-compliant bid. In coming to this conclusion, the Supreme Court offered the following analysis:

As mentioned, LeDain J. stated in Canadian Pacific Hotels Ltd., supra, that a contractual term may be implied on the basis of presumed intentions of the parties where necessary to give business efficacy to the contract or where it meets the “officious bystander” test…. [W]hat is important…[i]s a focus on the intentions of the actual parties. A court, when dealing with terms implied in fact, must be careful not to slide into determining the intentions of reasonable parties. This is why the implication of the term must have a certain degree of obviousness to it, and why, if there is evidence of a contrary intention, on the part of either party, an implied term may not be found on this basis. As G.H.L. Fridman states in The Law of Contract in Canada (3rd ed. 1994), at p. 476:
In determining the intention of the parties, attention must be paid to the express terms of the contract in order to see whether the suggested implication is necessary and fits in with what has clearly been agreed upon, and the precise nature of what, if anything, should be implied.
In this respect, I find it difficult to accept that the appellant, or any of the other contractors, would have submitted a tender unless it was understood by all involved that only a compliant tender would be accepted. However, I find no support for the proposition that, in the face of a privilege clause such as the one at issue in this case, the lowest compliant tender was to be accepted. A review of the tender documents, including the privilege clause, and the testimony of the respondent’s witnesses at trial, indicates that, on the basis of the presumed intentions of the parties, it is reasonable to find an implied obligation to accept only a compliant tender.

The Supreme Court therefore determined that the duty to reject non-compliant bidders was an implied term of the tendering process, but that this implied duty did not fetter discretion to the point that it compelled the purchasing institution, no matter the circumstances, to award to the lowest compliant bidder. In coming to this conclusion, the Supreme Court provided the following summary of the general principles for finding implied contract terms:

The second argument of the appellant is that there is an implied term in Contract A such that the lowest compliant bid must be accepted. The general principles for finding an implied contractual term were outlined by this Court in Canadian Pacific Hotels Ltd. v. Bank of Montreal, 1987 CanLII 55 (S.C.C.), [1987] 1 S.C.R. 711. Le Dain J., for the majority, held that terms may be implied in a contract: (1) based on custom or usage; (2) as the legal incidents of a particular class or kind of contract; or (3) based on the presumed intention of the parties where the implied term must be necessary “to give business efficacy to a contract or as otherwise meeting the ‘officious bystander’ test as a term which the parties would say, if questioned, that they had obviously assumed” (p. 775). See also Wallace v. United Grain Growers Ltd., 1997 CanLII 332 (S.C.C.), [1997] 3 S.C.R. 701, at para. 137, per McLachlin J., and Machtinger v. HOJ Industries Ltd., 1992 CanLII 102 (S.C.C.), [1992] 1 S.C.R. 986, at p. 1008, per McLachlin J.
While in the case of a contract arising in the context of a standardized tendering process there may be substantial overlap involving custom or usage, the requirements of the tendering process, and the presumed intentions of the party, I conclude that, in the circumstances of the present case, it is appropriate to find an implied term according to the presumed intentions of the parties.

As this case illustrates, when it comes to determining the actual terms of a contract, there is often more to the analysis than meets the eye. Sometimes things appear so obvious that they should go without saying. Other times, it isn’t so clear.

3. The Expressio Unius Rule
The expressio unius principle is an interpretive maxim that is defined in Black’s Law Dictionary as “The expression of one thing is the exclusion of another.” As Graham explains in Statutory Interpretation, the reader of a legal document may be led to assume that the drafter’s express reference to one thing and omission of another reflects a deliberate attempt to exclude the omitted item:

[W]here a statute fails to mention a specific case or item, we may have grounds to presume that the case or item was excluded on purpose rather than through the drafter’s inadvertence…. Consider the following example. In a will, a testator decides to leave the following gifts to her cousin: “my Toyota and my Cadillac, together with the tires on my Cadillac.” Will the testator’s cousin also receive the tires on the Toyota? We are tempted to say “yes” because it seems sensible to convey a vehicle’s tires along with the vehicle. Applying expressio unius, however, we may infer that the tires on the Toyota have not been given to the testator’s cousin in the clause. The testator has specifically turned her mind to the issue of the tires found on her various vehicles, and has explicitly stated that the tires on the Cadillac should go to the beneficiary. Had she intended for her cousin to have the Toyota’s tires as well, she presumably would have said so explicitly.

As this passage demonstrates, the need for consistency in detail is critical in a legal document. Had the drafter remained silent regarding tires, it would likely have been presumed that the tires were intended to be included with both vehicles. However, the express reference to the tires in relation to one car and the omission of any reference to tires in relation to the other car created an inconsistency that raised doubt regarding the author’s intention. This begged the question: Was the omission deliberate or accidental?

As Hall observes in Canadian Contractual Interpretation Law, while the expressio unius interpretative maxim may be applied to help determine the intention of the drafter, it should not be treated as an ironclad rule, since “it would rarely, if ever, be justified to presume that private contracting parties would even be aware of the expressio unius maxim, much less intend to apply it in crafting their agreements.” But that said, the expressio unius principle helps to illustrate how an inconsistent approach to drafting can cause doubt regarding the drafter’s intentions. Since ambiguity can cause interpretive disputes, the expressio unius principle is another reason why drafters should be careful to ensure consistency in their procurement documents.

4. The Class Rule
The class rule, referred to in Latin as ejusdem generis and defined in Black’s Law Dictionary as “Of the same kind, class or nature”, is an interpretive principle that narrows the scope of a general word when it follows a list of words that fall within a narrower class of the general word. In these instances, there is a tendency to read down the meaning of the general word and to imply that the drafter intended the general word to fall within only the narrower subcategory of the preceding words.

In Statutory Interpretation, Graham provides a useful illustration of how the class rule narrows the meaning of a general word:

Consider the phrase “lions, tigers, bears, and other animals.” This passage could attract the application of ejusdem generis, as it contains a list of specific items — namely lions, tigers and bears — as well as general words that embrace those specific items — that is, “other animals”. Where the maxim applies, the general words may be read down to include only those items that are of the same class or genus as the specifically mentioned items. In the lions, tigers and bears passage, for example, we could safely read down the phrase “other animals” to exclude any animals that are essentially different from lions, tigers, and bears. Single-celled organisms, such as paramecia or amoeba, could probably be excluded by the maxim without controversy, as could human beings and imaginary animals such as unicorns or dragons. It is important to realize, however, that the phrase “lions, tigers and bears, and other animals,” construed literally, could embrace every member of the animal kingdom: paramecia, humans, cuttlefish, and perhaps even imaginary creatures could be included. The literal meaning of the phrase “other animals” is potentially broad enough to capture every kind of animal. It is the ejusdem generis maxim (or the logical inference that ejusdem generis represents) that instructs us not to give the general words their widest possible meaning.

The class rule therefore serves to anchor the meaning of a general word within the context of the narrower class of words that appear before it. This is a useful principle for drafters to understand so that they can prevent ambiguity and uncertainty.

However, in Canadian Contractual Interpretation Law, Hall warns that this principle, like other interpretive principles, should not be taken as an absolute rule. In fact, the class rule remains subject to certain limitations:

Like the expressio unius maxim, [ejusdem generis]…is often thought of more as a rule of statutory interpretation than one of contractual interpretation, but it clearly does apply to contracts as well as to statutes. The rule only applies when general words follow specific ones (not when it is the other way around), and does not apply where the contract indicates that it would be inappropriate.
The ejusdem generis rule is best considered as an application of the normal rule of contractual interpretation requiring contracts to be read as a whole.

The class rule should therefore be viewed as another useful guide to remind drafters of the need for consistency and precision. While it may not apply to override your express intention contained elsewhere in your document, you would be wise to keep the rule in mind, particularly when you are using lists as a means of scoping categories.

5. The Association Rule
The association rule, referred to in Latin as noscitur a sociis and translated in Black’s Law Dictionary as “It is known from its associates”, recognizes that the meaning of a generic word can be affected by the words that are associated with it. As this rule illustrates, the flavour of vague or generic “vanilla” terms may be subject to subtle changes, depending on the words that surround them.

In Bennion on Statute Law, Bennion provides the following summary of the association rule and how it has been treated by the courts:

Noscitur a sociis
A statutory term is often coloured by its associated words. As Viscount Simonds said in A-G v. Prince Ernest Augustus of Hanover [1957] AC 436 461: “words, and particularly general words, cannot be read in isolation; their colour and their context are derived from their context.” The Latin maxim noscitur a sociis (it is recognized by its associates) states this contextual principle, whereby a word or phrase is not to be construed as if it stood alone but in the light of its surroundings…. [T]he general contextual principle was well stated by Stamp J in Bourne v. Norwhich Crematorium Ltd. [1967] 1 WLR 691, 696:
English words derive colour from those which surround them. Sentences are not mere collections of words to be taken out of the sentence, defined separately be reference to the dictionary or decided cases, and then put back into the sentence with the meaning that you have assigned to them as separate words…. (See also Pearl v. Stewart [1983] AC 109, 117).

As with other interpretive principles, the association rule should help inform the meaning of a particular term with reference to its overall context. Drafters should remember that their words, particularly vague or general words, can be shaped by the words around them. In Statutory Interpretation, Graham offers the following example:

Consider the word “disability” for example. Standing alone, “disability” is ambiguous. It may refer to a medical disability, a legal disability (such as bankruptcy) or any factor that renders the subject “less able” to perform a particular task. If the word “disability” is associated with the words “illness” and “death”, however, as in the phrase “the insurer will pay the amount of $10 million in the event of the insured’s illness, disability or death,” we may be able to rule out some of the meanings that “disability” carries standing alone. The association of the words “disability” with the words “death” and “illness” makes us relatively confident that the disabilities with which we are concerned are medical in nature. The word “disability” is coloured by its association with “death” and “illness”. Since legal disabilities, such as bankruptcy, seem to have very little in common with death and illness, we can safely exclude bankruptcy and similar legal disabilities from the word “disability” in the relevant passage….[T]his form of interpretation, which is unconsciously performed by most competent users of the English language, is often referred to as “contextual construction” because it requires us to survey the context in which an ambiguous phrase is found before rendering our final interpretation.

In order to achieve precision in meaning, carefully place general words within an appropriate context in order to help guard against confusion. The more general the word, the greater the need to frame it in its proper context.

6. The Ranking Rule
A close cousin to the class rule and the association rule, the ranking rule serves to expand or narrow the meaning of a general clause based on list that preceded it. In Bennion on Statute Law, Bennion provides the following examples that help illustrate how the ranking rule operates:

  • The 1953 case of Gregory v. Fearn considered the interpretation of section 1 of the Sunday Observance Act of 1677, which referred to a “tradesman, artificer, workman, labourer, or other person whatsoever.” In this case, the general term “or other person” was restricted to persons of the artisan class. It was held not to apply to persons above the artisan class, because the listed words all referred to persons within the artisan class.
  • The 1825 case of Casher v. Holmes interpreted the list that referred to “copper, brass, pewter, and tin, and all other metals.” The general term “all other metals” was held not to include gold or silver, since both gold and silver ranked above the listed metals.
  • The 1827 case Ex parte Hill applied the tapering string concept to exclude an item that was not mentioned, but that would have fallen halfway down a list of items. The list in question referred to a “horse, mare, gelding, mule, ass, ox, cow, heifer, steer, sheep or other cattle.” It was determined that bulls were excluded from the list, since they were seen to fall somewhere between horses and oxen and could therefore not be herded into the meaning of “other cattle.”

As these examples illustrate, the scope of general residual categories referred to at the end of a list may be narrowed not only by the words that appear before them, but also by the order of the words that appear before them. Care should therefore be taken to ensure precision when using lists, since those lists can narrow general, catch-all phrases that you may choose to insert at the end of your lists.

7. The Contra Proferentem Rule
While perhaps one of the most well-known rules of contract interpretation, the contra proferentem rule may be the least logical of the interpretive principles. In fact, it can be seen as a final “tie-breaker” or “coin-toss” rule: When all other things are equal and the meaning remains unclear, contra proferentem maintains that the benefit of the doubt will go against the party that drafted the document.

However, the contra proferentem rule needs to be put in its proper context. In Canadian Contractual Interpretation Law, Hall explains some of the limitations that apply to the contra proferentem rule:

Despite its familiarity, the rule is a somewhat anomalous one. There are a number of serious restrictions on its applicability, such as the need for an ambiguity before the rule is available at all and the admonition that the rule is only used as an interpretive rule of last resort. As a result, the rule is invoked relatively infrequently. While in theory, the rule is supposed to be applied in the same manner for all types of contracts, in practice it is invoked and applied far more often and far more easily in cases involving insurance policies and in cases involving guarantees. In such cases, different considerations (driven by concerns of fairness to particular contracting parties) seem to apply…. [M]ost rules of contractual interpretation address the appropriate balance between using context to increase interpretive accuracy and limiting the use of context to kept the interpretive exercise within reasonable bounds. Contra proferentem does not relate to this balance, but rather is a rule that favours one side over another on the basis of the somewhat collateral (and sometimes arbitrary) issue of which party drafted the contract or provision in question.

As Hall observes, this rule is more commonly used as an interpretive device in situations dealing with standard form contracts (such as insurance contracts) and where fairness considerations may affect the strict interpretation of a clause. The rule makes less sense when contracts are directly negotiated and drafted by parties of relatively equal bargaining strength.

While the contra proferentem may rank among the least influential or logical of the interpretive rules, it remains an important consideration in the procurement context. Procurement documents, like insurance contracts, tend to impose standard-form “take it or leave it” terms and have, in many jurisdictions, been subject to fairness considerations by the courts.