A Contract Should Say What is Meant When a contract isnt clearly written, bad things can happen to the

party who wrote it. At least thats the cautionary lesson of a recent Oregon Court of Appeals decision: Dial Temporary Help Service, Inc. v. DLF International Seeds, Inc., 252 Or App 376 (2012). In that case the plaintiff, Dial, wrote a contract for providing DLF with temporary workers. The contract stated that the temporary workers Dial provided would not be authorized to operate DLFs machinery, equipment and motor vehicles without Dials prior written approval. The contract also provided that the insurance Dial had for the temporary workers Dial provided DLF would not cover liability for injury or damages caused by Dials employees operation of DLFs equipment or motor vehicles. Finally, the contract stated that DLF accepted full responsibility for any loss or damages resulting from the operation of DLFs equipment and vehicles without Dials prior written consent. A DLF shift supervisor directed one of the workers Dial provided DLF to turn off a seed blender and to then go into a pit beneath that blender to remove debris. Dials worker had failed to use any lock out procedures to keep the blender from being turned on before going into the pit. One of DLFs employees turned on the seed blender while Dials employee was in the pit thereby cutting off one of the Dial employees hands. SAIF, plaintiffs workers compensation carrier, covered the claim and then charged Dial a retrospective premium of $241,000.00 for which Dial sought reimbursement from DLF as damages under Dials contract. Dial claimed that DLF had breached the contract arguing that this was precisely the kind of loss which the contract provision prohibiting Dials employees from operating DLFs equipment was intended to address. In support of its position Dial submitted an affidavit from its CEO stating that Dials intent in writing the contract was to protect against just such a retrospective workers compensation insurance premium charge. DLF argued that the retrospective premium was not damage resulting from the operation of its equipment by Dials employee without Dials prior written consent and that its assumption of liability and full legal responsibility was limited to third party claims against Dial or DLF resulting from the unauthorized operation of DLFs equipment, not from a charge for increased insurance premiums to Dial. The trial court granted DLF summary judgment because the injury to Dials employee wasnt caused by the Dial workers operation of the blender. The Court of Appeals chose a more subtle path to the same result. Instead of focusing on the causation issue, the Court of Appeals decided that the contractual provision in which DLF assumed full legal responsibility for any loss or damage resulting from the unauthorized operation of its equipment and vehicles was ambiguous. It ruled that the affidavit of Dials CEO had no bearing on the courts interpretation of the contract because there was no indication in the affidavit that the CEOs subjective intent had

ever been expressed to DLF during contract negotiations. Finally, the Court of Appeals resolved the ambiguity it had found against Dial solely because Dial had drafted the contract. On balance, the trial courts reasoning was simpler, more straightforward, and more harmonious with both the language of the contract and its apparent purpose. The Court of Appeals opinion seems intent on first complicating the problem before struggling to untie its own knot to nonetheless reach the same conclusion as the trial court. Regardless, the case itself is a reminder that in drafting any contract you should not only mean what you say but also say what you mean. 10/15/2012 Lawrence B. Hunt of Hunt & Associates, P.C. All rights reserved.