This article is an excerpt from The Art of Tendering: A Global Due Diligence Guide, which is available for purchase.
The 2007 matter of Rogers Communications Inc. – Application to review and vary Telecom Decision 2006-45 regarding the termination and assignment of support structure agreement provides an extreme example of the hazards of sloppy punctuation. With $2 million in extra costs hanging in the balance, the legal battle over a contract termination clause boiled down to a stray comma.
The case dealt with a support structure agreement between Bell Aliant and Rogers Communications Inc. The agreement allowed Rogers to string cable lines across thousands of utility poles in the Maritime region of Canada. The five-year deal contemplated five-year extensions, with either party having the right to terminate on one-year’s notice.
Bell Aliant moved to terminate the deal during the initial five-year term by providing one-year’s notice to Rogers.
Facing a reported $2.13 million in extra costs if its access to the poles was terminated before the end of the five-year term, Rogers disputed Bell Aliant’s interpretation of the termination clause, arguing that the right to terminate on one-year’s notice applied only to the extension periods and not to the original five-year term.
The parties turned to the Canadian Radio-television and Telecommunications Commission to interpret the termination provision. The dispute turned on the third and final comma in the following paragraph:
Subject to the termination provisions of this Agreement, this Agreement shall be effective from the date it is made and shall continue in force for a period of five (5) years from the date it is made, and thereafter for successive five (5) year terms, unless and until terminated by one year prior notice in writing by either party.
Rogers argued that the provision stating “unless and until terminated by one-year prior notice in writing by either party” applied only to the “successive five (5) year terms” portion of the paragraph, and thereby allowed for termination on notice only after the initial five-year term. In other words, Rogers read the clause as follows:
Subject to the termination provisions of this Agreement, this Agreement shall be effective from the date it is made and shall continue in force for a period of five (5) years from the date it is made, and thereafter for successive five (5) year terms, unless and until terminated by one year prior notice in writing by either party.
However, the Commission disagreed, finding Bell Aliant had the right to terminate during the initial five-year period. Turning to the rules of punctuation, the Commission determined that the insertion of the comma prior to “unless and until terminated on one year prior notice” split the notice period from the rest of the sentence so that the termination on notice clause applied to both the extension period as well as to the initial “period of five (5) years.” In other words, the Commission read the clause as follows:
Subject to the termination provisions of this Agreement, this Agreement shall be effective from the date it is made and shall continue in force for a period of five (5) years from the date it is made, and thereafter for successive five (5) year terms, unless and until terminated by one year prior notice in writing by either party.
The Commission later reversed its decision after Rogers raised new arguments based on the French version of the agreement, which was more precise in limiting the application of the termination clause to the extended terms only. Had it not been for the clarification provided in the French version, the stray comma and rules of punctuation could have cost the company over $2 million in extra fees.
