Sunday, March 10, 2013

“And”, “or”, “and/or”, and use of lists in contracts

When I reviewed contracts one of the things I would always check is the use of these words. When you use “and” in a list of multiple items, it means in addition to those other items. When you use “or” in a list of multiple items the party that has the right or duty may pick from amongst the “or” options.
For example:
Supplier shall provide X and Y requires them to provide both X and Y.
Supplier shall provide X or Y gives them the option to select between providing X or Y.

Somehow “and/or” has slipped into contract usage when it shouldn’t. If you use “and/or” there is a conflict created. You can’t have both occur for the same item. It needs to be either “and” or “or”, so its clear whether it is in addition to or in place of the item. When you have a list of things, such as remedies you may use “and” plus “or” in the list. For example: “Supplier shall provide A, B, and C or D.” This makes it clear that the only option is between C and D and they must provide either A, B and C or A, B and D.

When you use the word “or”, what you are doing is allow the other party the option to decide which option they will choose. The problem with that is most of the time the cost or risk of the options aren’t equal. If you allow the other party to decide which to option to choose, they may choose the one that has the least cost or risk impact on them. Frequently that may be the option that has the highest cost or risk impact on you. This means that you may need to qualify your use of “or”. One way of qualifying it is to establish a priority. For example you could say that they are to provide the first item on tlist that is “practicable” (meaning capable of being done.) A second way to qualify it would be to allow all options but also include a requirement that it be “cost neutral” to you. To be cost neutral to you, the party that has the right to determine which option they choose would need to reimburse any additional costs incurred by the other party as a result of their selection.

“And” or “or” are frequently included when you have a list of multiple items. The problem with including lists is whether the list is examples, or whether you intend the list to limit the rights or duty to only those items included in the list. If you don’t want the list to be limiting you need to make that clear. For example “This is includes, but is not limited to …..” shows the clear intent that it could include other items. If you were silent, you may be limited to only those items included on the list. If you want to limit the options make that clear. For example is you had a list of remedies, the way to make sure it is limited would be to state that those are the “sole” remedies.

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