What interests me about this case is whether there actually was a meeting of the minds but didn’t get properly drafted up.

I would look at a decision tree model of the conditions precedent to see if we could make sense of what outcomes people were trying to focus on.

Simple decision trees often make clear what outcomes have not been considered by the drafters: notwithstanding, subject to clauses are unlikely to be of great assistance if the contract is not complete.

But we’re talking about one of the core deal points here, rather than some side issue.

And I’d be more open to the notion that the parties had intentionally set aside a major issue if the contract wasn’t an incoherent mess. See this recent post.

Ken

But was this ambiguity, in which both parties thought that they had achieved something different than the other party, necessary to close the deal?

Was it really bad drafting or simply each side taking a calculated risk to get to the next step?

It’s also interesting to note that Chancellor Chandler thought that one party’s case was pretty close to being compelling enough for him to decide without resorting to parol evidence (although he didn’t specify whose… personally, I think it was Cerberus’s).

The decision seems to indicate that both parties (or at least Cerberus, its counsel and Lowenstein, if not URI) actually knew what was meant by the terms when the deal was signed (whatever they called it, it was a $100M option) and the ambiguity was somewhat contrived after the fact.

Was my language a little dramatic? Perhaps. But taking into account the turgidity of the language of the merger agreement and the fact that the issue in question was one of the most crucial of the transaction, I think some passion was warranted. But I don’t wish to alienate anyone, so I’ve gone back and toned down the two passages you refer to.

“Ivory-tower view”? Ouch! I would hope that I’ve established my credentials as someone who’s principally concerned with the practical side of contract drafting.

Ken

Saying that they “failed so abjectly” and ended up “wallowing in drek” is unduly harsh. That’s the sort of ivory-tower view that drives practitioners crazy. It might be a little fairer to say that they did as good a job as anyone could under the circumstances, and despite that, a big mistake was made.

Personally, I think this is more on Lowenstein Sandler than it is on Simpson. Lowenstein is obviously the firm that requested this term; the folks at Simpson are way too smart to offer up anything like this option in the initial draft. Lowenstein had to ask for it and, since they were only doing one set of documents, should have caught it when they sent back one of their revised drafts. (I’ve never worked at either firm but I’ve done deals with both.)