Yesterday I had an exchange on Twitter with Pam Chestek, aka @pchestek, proprietor of the Property, Intangible blog. (You’ll see next month my article that sprang from a fruitful discussion I had with Pam a few months ago.)
Yesterday’s exchange was prompted by my post on paid-up and royalty-free (here), but it strayed into the role of clarity in contracts. Here one relevant extract:
@KonciseD @mhintzesq If future use (and usefulness) is unknown, maybe it's better not to be clear
— Her Mavenship (@pchestek) July 27, 2015
And here’s another:
@KonciseD @mhintzesq MOST times its the only way you get the deal done, each content with its own interpretation
— Her Mavenship (@pchestek) July 27, 2015
My take on this topic is that you should strive to make everything in your contracts clear.
Two deal-making strategies come to mind when I think of contract clarity.
First, the other side might take a position on a particular usage that you don’t agree with. For example, they might think that best efforts means more than reasonable efforts—crazy, I know!—and are unwilling to budge from best efforts in a particular provision. If I wanted to do the deal badly enough, I’d say, “I’m willing to leave best efforts in the contract, but I disagree with you about the the legal effect of best efforts. If it becomes an issue down the road, we might have a fight on our hands.” But taking that position doesn’t involve tolerating lack of clarity, because I’d be clear about where we don’t have a meeting of the minds.
And second, the parties might elect to leave stuff out of a contract. That can be a legitimate tactic—if negotiating an issue is likely to take a lot of time or generate ill-will and the likelihood of that issue ever becoming relevant is slim, the parties might elect to sidestep it and instead address it down the road if it comes up. This too doesn’t involve tolerating lack of clarity. Instead, you’re kicking the can down the road.
So those two strategies pertain to uncertainty, not lack of clarity.
There’s a third strategy that I don’t endorse—gamesmanship. That’s where you deliberately introduce confusion with the aim of springing an unexpected interpretation on the other side if at any point it offers you an advantage. I don’t want to include land mines in my contracts. I wrote about gamesmanship in an oldie-but-goodie 2007 blog post (here). Here’s the gist of what I had to say:
My problem with gamesmanship is that it’s deceitful. If that doesn’t pose any ethical problem for you, consider the practical implications: If the other side catches you playing any of these games, it could sour your client’s relationship with the other side, resulting in your client missing out on future deals and your losing your client’s business. It could also inflict more general harm on your professional reputation. And playing games with ambiguity can result in your being hoisted by your own petard.
Regarding the last of those implications, in this 2009 post I wrote about a case that showed that the Delaware Chancery Court likely wouldn’t look kindly on one kind of gamesmanship, “creative ambiguity.”
[Updated July 29, 2015: And in a comment to this post, Vinny mentions vagueness—use of words like promptly and reasonable. I suggest that that too pertains to uncertainty and not lack of clarity. Yes, vagueness can give rise to dispute in borderline cases, but in the right circumstances it’s your best choice.]
So I recommend you ensure that everything in your contracts is clear, that you be clear about any points where the parties don’t have a meeting of the minds, and that you not indulge in gamesmanship. Regarding leaving stuff out of a contract, make sure that it’s a deliberate choice after considering the risks, and not the result of oversight.
The above extracts might not accurately reflect Pam’s views, in which case she’s welcome to chime in!
Ken,
I think of ambiguity as capable of having more than one reasonable interpretation (a common definition offered by courts) and clarity as the opposite of ambiguity. I therefore think of vagueness as a “less-evil” type of ambiguity: capable of having multiple reasonable meanings (perhaps along a spectrum of reasonable meanings) depending upon the context. So terms such as “reasonable” and “material” are vague. But if vagueness is a type of ambiguity (and I’ll assume that you’ll take issue with me on that…), then I’d say that it’s sometimes ok to not be clear when drafting, since vagueness is a staple of our trade as contract drafters.
-Vinny
Thanks for mentioning vagueness; I’ll add that to the mix. My categories of uncertainty are in flux (see this post), but I don’t think you’d find any linguists willing to say that vagueness is a kind of ambiguity.
I bet linguists would say it depends on your definitions.
If a word or word sequence is ambiguous whenever it has two or more reasonable interpretations, then whether a vague word or word sequence is ambiguous rests on whether it has two or more reasonable interpretations.
A vague word or word sequence necessarily has either (1) no reasonable interpretation; (2) exactly one reasonable interpretation, (3) two or more reasonable interpretations.
If (1) applies, the word isn’t vague, it’s nonsensical. If (2) applies, the word’s not vague, it’s certain. If (3) applies, the word is ambiguous by definition.
So *under the common definition of ambiguity*, vagueness is either a synonym for or a subset of ambiguity.
The same analysis can be applied to the terms ‘unclear’ and ‘uncertain’. They are either synonyms for or subsets of ‘ambiguous’ (so defined).
One can divide ‘ambiguity’ into (1) ‘lexical’ or ‘semantic’ ambiguity on one hand and (2) ‘syntactic’ ambiguity on the other, where the former means uncertainty over the meaning of a word because it has two or more dictionary definitions, and the latter means uncertainty over the the meaning of a sentence because its structure is unclear.
Such a division does not show that vagueness is not a synonym for or a subset of ambiguity. Showing ‘no overlap’ between ambiguity and vagueness would require some other definition of ambiguity, as implied in the following quotation (sorry, lost the source, probably Wikipedia):
‘The concept of ambiguity is generally contrasted with vagueness. In ambiguity, specific and distinct interpretations are permitted (although some may not be immediately apparent), whereas with information that is vague, it is difficult to form any interpretation at the desired level of specificity.’
I had a high school English teacher who explained the difference between “vague” and “ambiguous” thus:
From an instruction manual for a nuclear reactor:
Ambiguous: “You can’t put too much water in a nuclear reactor.”
Vague: “You must put plenty of water in a nuclear reactor.”
The ambiguous statement can be read to mean “no matter how much water you put in the reactor, don’t worry, the more the better” OR it can be read to mean “be careful how much water you put in the reactor, too much and you have a real problem on your hands!” Two entirely different meanings.
The vague statement is problematic because you have no idea how much “plenty” is!
Thanks Ken, I appreciate the shout-out.
As to your suggestion that one advise the other party that you don’t agree with an interpretation, that’s going to be extrinsic evidence and likely inadmissible for purposes of contract interpretation. So there’s no point in stirring the pot.
Sometimes one party is simply wrong in their understanding of the law or the facts (and I always hope it’s not me). In your “best efforts” example, I accept the language with a mental note of “good luck with that,” knowing that the standard is no different than “reasonable efforts.” If the other side is happy because they have the mistaken impression that “best efforts” is a higher degree of effort than “reasonable efforts,” I don’t think it’s my role to correct their mistaken understanding of the law or to ensure that we agree on the correct interpretation of the law or the facts involved.
It also may be a disservice to your client to get ambiguous language corrected. For example, say I am engaging someone for occasional services and that person says he can’t perform them during church. You think that’s not a problem because you are a churchgoer too and so you’re not likely to require their services during church. You get the contract language, which says that the service provider is available except for Tuesdays and at 5 pm. This can be interpreted as either as 5 pm on Tuesdays only, or all day Tuesday and every day of the week at 5. It can certainly be clarified, but if I’m ok being bound by the interpretation that is my worst-case, then there’s no benefit in clarifying and there is benefit in not clarifying: I have the ability to make the argument in the future should it become necessary to do so.
Regarding my best efforts point, I think it’s best for everyone to know where there is and isn’t agreement. Mind you, I haven’t researched the implications of this sort of impasse. I’d have thought that a court would say that on that issue, there’s no contract.
Your point about not correcting the other side’s mistakes raises an interesting ethical issue of the sort discussed in Greg Duhl’s article on ethics in contract drafting.
And I want a meeting of the minds. I wan’t to do business, I don’t want to play games.