The biggest conceptual obstacle to clearer contract language is the notion of “tested” contract language—the idea that if a court offers its interpretation of confusing contract language, we’re forevermore committed to using that confusing contract language to convey that meaning.
But recently I’ve heard people discussing a related concept—whether a provision is “market”. A provision is “market” if it’s so widely used that opting to use a different provision would put one at a market disadvantage.
I suggest that there’s no reasonable basis for assuming that the notion of “market” provisions precludes clearer contract language.
First, that herd mentality is what has given us such wonders of contract-drafting nonresponsiveness as the “pari passu clause” in sovereign-debt contracts, something I discuss in this article.
And second, fixating on the notion of “market” is to confuse what you say in a contract with how you say it. A given concept might be standard, but that doesn’t prevent you from expressing that standard more clearly than it is conventionally.
As always, it’s unhelpful to deal in generalities. I invite any proponent of the notion of “market” provisions as an obstacle to change to suggest to me a provision that is market. I expect that I’d be able to make it clearer, and in a way that doesn’t render it somehow threatening or unpalatable.
“Market” is the argument of next-to-last resort. It usually means the person claiming a provision is “market” does not have a good reason for having the provision in the agreement. You can be pretty sure that when you’ve demonstrated that the “market” provision does not make sense, you will be met with the argument of last resort: it’s revenue recognition.
At that point, prepare final drafts, have your procurement explain to the their sales why their revrec issue is not your issue, and be done with the negotiation.
Since I only noticed the use of “market” in more recent years, I view
the “market” argument as a more recent incarnation of the old “standard”
argument.
To me, when someone is defending language that they are using as being “standard” or “market” they are attempting to do the same thing. Rather than argue on first principles (i.e. why the parties to the contract need the specific business term because of their particular business deal, or if the parties don’t care one way or the other, then why the lawyer believes that the language reflects the business deal better or is more clear) this is short hand for “the last 2 lawyers I dealt with on a similar contract didn’t notice it or didn’t raise it as an issue” or “I don’t really know and don’t want to spend time talking about it” or “it is part of a bunch of clauses I copied from another deal that I didn’t read too carefully and don’t want to think about”.
I also find it annoying the huge amount of ego that is inherent in a lawyer’s assertion that they know what is “standard” or “market” for a particular type of contract. There are literally millions of lawyers and billions of agreements – none of us see (let alone analyze in detail) more than a minute fraction of the universe of contracts. The more humble (and accurate) presentation of the argument is that in first lawyer’s experience they have mostly included the particular clause or particular language. When stated that way it is open for the opposing lawyers to argue about their different experiences and the reasons for the language they have used in the past experience rather than getting into the mug’s game of trying to prove or disprove what is “market” or “standard”.