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Can One Word in a Contract Cost Over a $200,000?

Posted by Alexander Novak | Jan 30, 2015 | 0 Comments

Yes, sometimes a word or two, even in a forty page contract can make a tremendous difference, and change the entire outcome of the case.

We had a client's case that went up to the highest Federal court in New York and was then sent over to New York's highest court in Albany, the Court of Appeals, and a half of million dollar award was thrown out because of a few words. In a case called Israel v Chabra (537 F.3d 86) the court held that the words 'provided that' "suggests a condition, and our conclusion in that regard is consistent with the punctuation and grammatical construction of the Guaranty's first paragraph.” The entire argument the defense raised was the lack of notice of default. Meaning, the plaintiff, OUR CLIENT, who did not give the notice argued that the notice was not a big deal because the defendant knew about the default. The lower court agreed with the plaintiff and awarded him over $330,000 and legal fees of $299,000.

This was all reversed on the two appeals. This case wandered through three courts for as many years and each sides' legal fees were well over $300,000.

In another matter, an employee was able to get his $150,000 bonus paid each year of his three year employment contract as apposed his employers offer of just one bonus for the first year. Again, that was because of a change of just one word.

Lawyers are not usually slow readers, we just have to think about how slight grammatical nuances can turn around a whole contract. So that is how a word or two can cost or save you hundreds of thousands of dollars.

Alexander Novak, ESQ.

Partner, Novak Juhase & Stern

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About the Author

Alexander Novak

Partner | Alexander Novak  has represented professionals in high profile white collar crime matters including obtaining complete immunity for a co-conspirator in the largest inside  trading case in US history, US v. Martoma, and recently obtained acquittals of two doctors in a medical insurance fraud case....


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