Union Corner: Contract Interpretation Follows Four Well-Established Rules

The NTEU-FDA contract went into effect on Oct. 1. There have been a several sometime major disagreements between the union and management on the exact meaning and interpretation of certain provisions, such as “official time” and “core hours.”

The contract, however, has hundreds of provisions, which will be implemented. A recurring question will be: “What does a particular contract provision mean?” Each bargaining unit employee will have to make a first cut on whether there is a contract provision that even pertains to a particular situation.

The rules of interpretation are also called “rules of (contract) construction.” These rules apply to any contract and have usefulness beyond the NTEU-FDA contract. Since these rules are also used to construe statutes, including the Food, Drug and Cosmetic Act and its associated regulations, you may already be familiar with them.

A contract is a set of promises, and the law provides a remedy when the promises are broken. The first and central question is: “What is the promise?” What did the parties to a contract intend to do or accomplish? What were their reasonable expectations?

Unfortunately, humans and contracts are not perfect and do not function perfectly. Contract deficiencies are frequently uncovered when an attempt is made to implement a contract provision. The very fact that the parties who actually drew up a contract may disagree over its meaning highlights the difficulty of these questions. In the case of the NTEU-FDA contract for 5,000 employees, only seven representatives were involved over five months in the entire negotiations.

Although disputed interpretations may be difficult to resolve, our system of law attempts to find contracts valid and enforceable as well as definite and operative. This approach is founded on a belief that individuals should control their own destiny in part by making their own bargains. When parties take the time to write out their promises in a contract, a court will first look within the “four corners” of the contract to discern the intentions of the parties.

The theory is that people communicate by means of language and what they say or write is an expression of what they actually were thinking. Practical experience tells us that this is not always true. There is a lot of non-verbal communication and unsaid things. The analysis begins with the words and language used in the contract. This standard approach, developed over centuries of practical experience, gives the four basic rules of construction.

• Rule One. Words are given their ordinary meaning. The assumption is that people engage in plain talk. Secret meanings of words thus have no status. On the other hand, technical terms and words are given their technical meaning when they are clearly used in a technical sense. For example, “official time” is used in its technical sense throughout the contract.
• Rule Two. A contract is interpreted according to business custom and use in the place where it was made or will be performed. This rule recognizes that in a particular business, certain words may have a different or trade meaning that all members of the group recognize and use. Our business is federal civilian service.
• Rule Three. Contracts are construed as a whole. A court will first attempt to find and then give effect to a contract’s general or overall intent as expressed in the words of the contract. The court asks: What are the parties trying to do? What are they trying to achieve? What is the overall or dominant thrust?
• Rule Four. Specific clauses are subordinated to a contract’s general intent. Even when a specific clause can literally be read to contradict the overall intent, it will be interpreted as implementing the contract’s overall intent. Here the court is being practical. Over centuries of experience, it has seen all the infirmaries to which man is subject and goes for the big picture.

Two of the four basic rules focus specifically on language and the meaning of words. The other two attempt to discern the overall or general intent which is given predominance over conflicting subordinate clauses. If, after analysis, the intentions of the parties remain unclear, courts can go further and take testimony from the parties as an aid to accurate construction. A court might consider the parties’ conduct, such as performance or the bargaining history. Each party explains what it understood and intended during the negotiations toward the presumed final understanding and agreement

A court may seek an explanation of the special meanings of words used in a technical sense.

Although not a rule of construction and not a formal part of contract interpretation, once a court is certain of the parties’ intent to contract, it can and will infer reasonable terms consistent with the overall intent. Uncertainty as to some terms is not necessarily fatal to a contract.

Now that bargaining unit employees have individual copies of the contract and two hours to read it, their task is to discover their responsibilities and rights. Employees should be careful to note applicable standards and procedures. Employees do not have to go it alone. Help is available. The chapter has conducted and will sponsor lunch-and-learn sessions on various provisions of the contract.

Some provisions have been discussed in previous issues of News Along the Pike, the Chapter Newsletter or the chapter Web site at http://www.nteu282.org. Finally employees can contact union stewards.

Robert Young is president of the local chapter and a member on the D.C. and Maryland bars.