Opinion ID: 1350666
Heading Depth: 1
Heading Rank: 1

Heading: the contract is ambiguous

Text: Paragraph II of the employment contract between St. Yves and Mid State provides that he shall be employed for 2 years and that that term will be renewed automatically if neither side gives notice of nonrenewal 60 days before the contract's expiration. The Bank gave no notice within the prescribed period and St. Yves' contract had been renewed for a second 2-year term when the Bank purported to discharge him. If paragraph II stood alone in this contract, there would be no question that the contract had been breached. St. Yves would have been deprived of job security he had evidently bargained for. Paragraph II, which is unambiguous in itself, serves no other purpose than to ensure St. Yves' employment for the agreed-on term. Paragraph II does not stand alone, however. As the majority points out, paragraph X provides that St. Yves can be discharged for any reason, at any time and that such a termination shall not constitute a breach of this agreement by bank. The obvious question is: if this is so, why did the parties adopt paragraph II? What paragraph II gives, paragraph X takes away and vice versa. One provision can be given effect only by depriving the other of all force. Read together, they make no sense. In other words, the two paragraphs render the contract ambiguous. The majority attempts to avoid this obvious conclusion. St. Yves asserts that paragraphs II and X of the employment agreement create an ambiguity. However, paragraph II has to do with the term of employment, whereas paragraph X is a more specific clause dealing with discharge. It qualifies the rest of the agreement ... Paragraph II creates only a presumptive term of employment, which may be terminated under the procedures of paragraph X. Thus, each clause of the employment agreement can be given effect, and it is not ambiguous. (Italics mine.) Majority, at 377-78. This argument only demonstrates that paragraphs II and X do render the contract ambiguous. The majority recognizes that a true resolution of an apparent contract ambiguity may limit the effect of one or another of the inconsistent terms, but that it must give some effect to each. A purported resolution which, in contrast, gives one contract term absolute priority over another simply points up the contract's ambiguity by confirming that the conflicting provisions are indeed irreconcilable. Consequently, in attempting to reconcile these two inconsistent terms, the majority suggests that paragraph X permits paragraph II some scope to operate as a presumptive term of employment. On close examination, however, the majority's purported resolution of the contract's ambiguity turns out to be the second, specious kind of resolution because it gives paragraph X absolute priority over paragraph II. This can be demonstrated by asking an obvious question: What is a presumptive term of employment? If that term has any meaning at all, the presumption cannot be one which is rebutted by the employer's decree alone. If the employer can simply dismiss the employee unilaterally, there is no presumption of employment at all. Unless the employer carries a real burden of justification, paragraph II has no force or effect. Unless this presumption of continued employment actually entitles the employee to something  a right to notice and an opportunity to speak, probation and review, and so on  it is not even a bump on the road to the unemployment office. The majority attempts to give some body to its ghostly presumption when it writes that St. Yves was terminated under the procedures of paragraph X. But those procedures consist of a right to termination pay, not the rights  an explanation, an opportunity to speak, probation and review or some right of appeal  which would place a real burden of justification on the employer and give meaning and content to the presumption of continued employment purportedly contained in paragraph II. In fact, the majority's presumptive term of employment is an illusion and its interpretation of paragraph II simply reads that paragraph out of the contract. The majority's enforcement of paragraph X is simply an arbitrary preference of one of two inconsistent contract terms. According to the majority, the Bank has the right to terminate St. Yves' employment unilaterally and this right is unfettered  regardless of the 2-year term of employment granted in paragraph II. However, the majority's giving one inconsistent term complete priority over another in this way only confirms that the terms are indeed irreconcilable, and confirms that the contract is ambiguous.