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21 Dec 2016

Eating or drinking on the MTR – a lesson in the importance of precise contract wording

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Ever been annoyed by the MTR’s public announcements about what you can or cannot do? A common one used to be “Eating and drinking is not allowed in trains or the paid areas of stations.”  This has recently changed to “Eating or drinking is not allowed in trains or the paid areas of stations.”

Although the MTR is admirably clean because people cannot eat or drink on trains or in stations, what annoys me, as a lawyer, is that both versions of this message are wrong.

The first version of the message means that you cannot both eat and drink at the same time, but doing only one of them is fine.

The second version of the message begs the question “which of these two activities is not allowed?”.

Versions of the message which would work include “Neither eating nor drinking is allowed …”,  “You are not allowed to eat or drink …” and  “No eating or drinking is allowed …”.

This is merely amusing in this context. But, as reported in a recent English law court decision, a buyer of land for the development of a superstore found a similar mistake in the purchase contract far from amusing. The mistake had a disastrous consequence.

The buyer had a right to rescind the conditional purchase contract if "all of the Conditions have not been discharged … by the Longstop Date".  The intention was obviously that, if the longstop date arrived but any one of the conditions had not then been satisfied, the buyer could rescind.

But, because of the use of “all”, which has a similar effect to the use of “and” in the first version of the MTR’s message, the buyer found that the fact that some of the conditions had been satisfied meant that it could not rescind despite other conditions not being satisfied. The court decided that the wording clearly meant that the right to rescind arose only if all of the conditions remained unsatisfied on the longstop date.

The case name is Dooba Developments Ltd v McLagan Investments Ltd [2016] EWHC 2944 (Ch).

This mistake is an example of the uncertainty that can be caused, when drafting contracts, by using plural words, such as “all”, “both” and “are”, instead of singular words, such as “each”, “either”, “any one” and “or”.

Enjoy your next meal or drink on the MTR!

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Mark Reed

Mark Reed
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