David Jacobson's External Insights

Get the basics right: the importance of plain language in agreements

What would you do if you thought you had a 5 year business licence only to find the other party could terminate it on 1 year's notice because of a comma?

In a story reminiscent of Eats, Shoots and Leaves , the Canadian Radio-television and Telecommunications Commission has decided that Rogers Communications Inc.'s agreement with Aliant allows for termination at any time, without cause, upon one-year’s written notice during the 5 year term. As a result Rogers may be required to pay an extra $2.13 million to use another company's utility poles for its cables.

“Based on the rules of punctuation,” the comma in question “allows for the termination of the [contract] at any time, without cause, upon one-year's written notice,” the regulator said.

The clause said:

The agreement "shall continue in force for a period of five years from the date it is made, and thereafter for successive five-year terms, unless and until terminated by one year prior notice in writing by either party."

According to the WSJ Law Blog, "a contract dispute arose when a company named Aliant scrapped a five-year deal it struck with Rogers in 2002 to string its cable lines across utility poles. Rogers thought the contract was guaranteed for five years, but Aliant — armed with a punctuation manual — said that wasn’t the case. It argued that a single sentence in the 14-page contract permitted the entire deal to be cancelled with one-year’s notice, allowing Aliant to raise its rates."

One of the first things I did as a young lawyer advising commercial tenants was to summarise 40 page property leases in plain English: focussing on the basics such as what was the term (length) of the lease, the termination and extension provisions, the rent payable and rent review procedures. It was not always easy to do. I still see agreements such as licences and employment contracts where the core obligations and rights of the parties are ambiguous.

If these agreements are to be worth the paper they are written on, it's critical to get the basics right and for the parties (not just the lawyers) to check them and ensure that what is written reflects the intention.

AWB: Cole Inquiry hearings resume

The Cole Inquiry hearings resumed on 22 August (transcripts).

The hearings relate to documents to which a claim for privilege by AWB has been lost in the Federal Court (the apology or contrition statement) or for which the claimed privilege in relation to those documents had either been waived or was no longer claimed or had originally been claimed in error.

Even with reference to contemporaneous documents Counsel assisting is still having difficulty in ascertaining what AWB executives actually knew about the payments.

How would your organisation look if its day to day activity was minutely examined? At the least, AWB's record keeping was disorganised.

UPDATE: Hearings adjourned on 24 August and will resume on 30 August.

AWB Index

Squidoo Lens

Technology risks: controlling USB connections

With the rapid acceptance of iPods, mp3 players, digital cameras, flash drives and portable hard drives (all with substantial memory capacity) there are a whole range of new devices with USB connections which could connect to a business's network through any PC USB connection and pose risks for that business. And that's not allowing for someone who really intends to copy files by using a File Transfer Cable.

I recently read that some businesses are supergluing their computers' USB ports to prevent access by such devices. But that shouldn't be necessary with USB security software such as Device Lock.

Rather than trying to regulate the type of device that could be attached to a computer network, it is more helpful to identify the risks that a business faces by allowing any uncontrolled device in its premises and to then manage those risks.

Why should businesses be concerned about devices which connect to their network to either gain access to their internal systems?

The risks include:

• unlawful use of a third party's intellectual property ,

• privacy breach ,

• misuse of company resources,

• breach of information and data security, and

• breach of confidentiality.

Do you have a policy on how your business deals with these risks?

AWB: case study in the difficulty of apologising

It's been known for a while that AWB retained a US risk management consultant (Peter Sandman) to help it draft an apology.

What has only just been revealed (in the package of documents known as Exhibit 1020) is why that apology was never issued. AWB couldn't make a proper apology, it kept drafting defences.

Sandman's comments on the drafts are insightful: see for example his emails of 1 January 2006 and 7 January 2006.

The Age says "Sorry is the hardest word for AWB".

AWB Index

Using evidence to make decisions

Decision-making is not always linear: it can evolve using a combination of facts and personal biases.

In How We Really Make Decisions David Maister suggests that "nearly all the time, rhetoric triumphs over reason, personality over substance, politics over merits, neuroses over facts."

He refers to Lovaglia’s Law: The more important the outcome of a decision, the more people will resist using evidence to make it.

Bob Sutton also comments on Lovaglia's Law: the more is at stake, the more that people will be motivated to push for solutions that increase their power and decrease other’s power.

It's an interesting proposition. If you want more discussion, read the comments after David Maister's post.

UPDATE: Coincidentally, I've just read this post on how some angel investors make their investment decisions: before they even get to the financial analysis, they go through an initial meeting and then a getting to know you period to establish trust and an understanding of the people they are dealing with ("gut feel"), and only then comes the rational decision process.

Cole Inquiry and AWB update

As the new report date of 29 September gets closer, both the Commissioner and AWB are manoeuvring to resolve access to documents and information:

• the Inquiry has announced it will resume hearings on 22 August;
• AWB is continuing its Federal Court hearing on legal professional privilege over documents.

On 9 August AWB obtained a 24 hour injunction against the Commissioner publishing certain documents.

There is media speculation about further witnesses to be called to give evidence at the Inquiry.

UPDATE: On 10 August, the injunction against publication of certain documents by Cole was vacated. What will be released?

AWB Index
Squidoo Lens