I sporadically write about contract instances of lexical ambiguity, which arises when context is insufficient to allow one to determine the sense of a word that has more than one meaning. (See MSCD 6.5 and these three blog posts.) Well, here’s another one for you fans of lexical ambiguity: in this item over at Legal Blog Watch, Bruce Carton describes a dispute between actor Michael Douglas and his ex-wife Diandra. I couldn’t improve on Bruce’s summary:
In 1987, Michael Douglas starred as Gordon Gekko in the famous film “Wall Street.” Twenty-three years later, Douglas is starring in “Wall Street: Money Never Sleeps,” which follows Gekko after his release from prison after serving time for the insider trading that occurred in the first movie (“Blue Horseshoe Loves Anacott Steel!“).
In the decades between the two movies, Douglas divorced his wife, Diandra, and their divorce settlement provided that she was entitled to money from “spinoffs” of work created when the couple was married. Now, THR, Esq. reportsDiandra is claiming that she is entitled to money from “Money Never Sleeps,” but Douglas argues that the new film isn’t a “spinoff” but rather a “sequel.”
The lesson for the contract drafter, whatever their practice area, is that you should be wary of industry jargon. As discussed in the video below, it seems generally accepted in the entertainment community that the terms “spinoff” and “sequel” have distinct meanings. But evidently those meanings aren’t sufficiently established to preclude Diandra from starting a fight over the issue. And in contract drafting, what really matters is whether you were able to avoid getting into a dispute, not whether you were able to win one.
And you need to be particularly careful when you’re using jargon to divide a bundle of rights or obligations among the parties. This dispute wouldn’t have occurred if Diandra had been granted rights with respect to spinoffs and sequels.
So when you resort to industry jargon, rather than, say, a legal term with a more established meaning (in this case, “derivative work”), you should make sure that its meaning is clear enough to preclude the possibility of a fight, even by a party sufficiently aggrieved that it’s willing to be somewhat unreasonable. If necessary, explain in the contract what the term means.
Of course, you might think the meaning sufficiently established that it would be silly to provide any such explanation. But making that determination requires judgment, as there’s no clear line separating the lexically ambiguous from the unambiguous.