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The Two Latin Words All Dentists Should Know: “Contra Proferentem”

By March 25, 2016November 5th, 2019Employment Law

No, vino veritas (although who doesn’t love a good Pinot Noir)…

The two latin words all dentists should know are contra proferentem – or in other words, “interpretation against the draftsman.”  This is something that comes up almost on a daily basis in with our clients so we thougth we’d share some of this knowledge with dentists reading the blog.

Contra proferentem (rhymes with referendum) a legal doctrine that means if a term of a contract is vague, ambiguous, or unclear, a court is going to interpret it against the party who drafted the contract. In employment law contract, the employer drafts the contract.  So essentially, this legal rule is there to protect the little guy in contract law.

The Supreme Court of Canada said this about the legal doctrine in 1981:

“… any ambiguity in a term of a contract must be resolved against the author if the choice is between him and the other party to the contract who did not participate in the drafting.” –McClelland & Stewart Ltd. v. Mutual Life Assurance Co. of Canada, [1981] 2 S.C.R. 6 at p.15.

It doesn’t exist because judges want to discourage employers drafting their employment contracts. The reasoning behind it is to encourage employers to be as clear as possible and leave nothing ambiguous in their contractual dealings with employees, since employers hold the bargaining power in contract negotiations.

Let’s look at some examples of how this could work against employers:

  1. You terminate a 8-year employee without cause and give the employee 8 weeks of termination pay.  The employee argues that they deserve 8 months of notice (or pay in lieu of notice) under their common law entitlement to notice of termination.  The employment contract does not contain a termination clause.  Since the contract is silent as to entitlement upon termination, contra proferentem applies and a judge awards the employee the full 8 month common law entitlement to pay in lieu of notice.
  2. An employer denies a salesman a large sales bonus but instead gives him a small sales bonus.  The employment contract did not explicitly state whether the bonus was payable on sales or on gross profits. Since there were two different interpretations, contra proferentem applies and the interpretation least favourable against the employer is selected as the correct interpretation by a judge.  The employer now has to pay the larger bonus.

These are only two examples of how those two Latin words could work against employers.  There are many others!

Fortunately, there are ways to build in protection into your employment contracts to help prevent any surprises down the road.

  1. Add a clause that limits the use of the contra proferentem rule for that contract (Speak to your lawyer to add this into a contract).
  2. Employers can build in flexibility into their contracts by using the right language to allow for changes during the employment contract. For example, employers can ask its employees to acknowledge that the agreement applies to his or her employment, despite any changes to their position, job duties, or salary.
  3. Avoid uncertain language like “at least”, “including”, or my favourite “etc.”
  4. Provide a fixed termination notice period in the contract, or tie any notice of termination to the current employment standards legislation.
  5. Review and amend your contracts when appropriate.

The lawyers of DMC LLP have helped Dentists across Ontario strengthen their practices and ensure clarity in their employment contracts (as well as commercial leases, associate agreements, and purchase/sale agreements). Contact us if you would like to know more or discuss a particular legal issue within your practice.

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