What lies at the heart of a business contract?
Words, certainly, and they unquestionably mean something.
The central problem in a current contract dispute between New York City and mega telecommunications provider Verizon is that principals on both sides of a mutually executed agreement can’t seem to even closely align themselves on what was precisely meant by its material terms and conditions.
City Mayor Bill de Blasio says that Verizon “must face the consequences for breaking the trust of 8.5 million New Yorkers.”
Verizon officials counter that, if the mayor would actually give the contract a bit of close scrutiny, “he would clearly conclude — as others have before him — that we have lived up to our obligation 100 percent.”
The question on which the contractually warring parties are at loggerheads is identical to the query that is a focal point in contract disputes across the country, including in legions of contract breach claims that are litigated by business entities in Ohio.
And that is this: What was the cited obligation?
Many readers of our Dayton business and commercial law blog might reasonably think that the central gist of a contract executed between two sophisticated parties would be clear enough: after all, careful negotiations and attendant due care certainly went into the details.
That is not always the case, though. City officials say that Verizon didn’t comply with an obligation to install fiber optic cable in a manner sufficient to hook up millions of metro consumers. The communications company says that it did just that, along an already existing network used for copper cable.
The city says that the “existing network” argument is disingenuous and that Verizon was under a contractual mandate to install cable by all conceivable methods — underground, above utility poles “or otherwise” — to get the job done.
Verizon counters that such an interpretation was never agreed to and that abiding with such a demand would have caused “enormous and unnecessary disruptions” to New Yorkers.
The matter is now before a state court judge, with the city having filed a civil lawsuit alleging contractual breach earlier this month.
The case certainly underscores the critical importance of clarifying exactly what is meant in a contract through comprehensive and eminently clear language.