David Miller is general counsel of Rogers Communications, the Canadian communications company. I met him in 2007 when, shortly after helping them out in the Canadian comma dispute, I was invited to give a day-long seminar at Rogers. That seminar contributed to my love affair with Canada, as David attended the entire seminar. From start to finish. Unheard of! Rather than simply sending your paralegals or junior associates to one of my seminars, you might want to follow David’s example and sign yourself up too. Improving contract language requires buy-in by people at different levels in the contract process.
At any rate, I’ve corresponded with David sporadically since then. Yesterday he sent me the following thoughts about how wires can get crossed when its comes to drafting contracts for international deals:
When people in different countries use English and it is not their native language, problems of interpretation and usage can occur. I encountered instances of this some years ago, before I joined Rogers.
For example, I did an agreement where we used the term “approval by the competent authorities in country X”. The other side was incensed because they interpreted the word as suggesting that some of their government people were incompetent or crazy.
In another deal we had a misunderstanding over the term force majeure. In the country in question (communist at the time) they did not recognize a labor strike as a force majeure—strikes didn’t exist!—and we of course had a different interpretation.
In another deal, we used the term “right of first offer” and this meant someting different to the other contracting party in the US than it did to us in Canada.
So a big issue is the fact that try as you may, the nuances of the English language are such that people from different cultures may derive conflicting meanings from a given text, particularly when you’re dealing with people from countries where English is not the first language. This calls for longer rather than shorter agreements where each provision is spelled out in detail and there is a lot of asking “what did you mean by that”. Mind you, the “what did you mean by that” approach is useful even when you’re dealing with people in the same city as you!
I invite you to post a comment about your own such experiences.
1 thought on “When Cultures Clash in Contract Drafting”
For a Dutch company, I recently negotiated a share purchase agreement with an American company. We, as the seller, had drafted the SPA and were (you will not be surprised) accused of ‘sand-bagging’. As US lawyers apparently know, sand-bagging means that a seller is creating such volumes of obstacles preventing warranty claims, that it becomes hard or impossible for the purchaser to recover any related damages. I learnt that sand-bagging is not necessarily honourable. Also, I was told to believe that if a warranty is inaccurate, a purchaser would be ‘entitled’ to damages (as they desired, regardless of their due diligence findings). Such claim-focussed course of dealing is not similarly common in continental European legal practice (at least not in The Netherlands).
As US lawyers probably don’t know, The Netherlands is for about half of the country below sea level. In fact, my country was created by human beings, thanks to dikes. Now if a US lawyer tries to convince me by saying that I am sand-bagging (begging for sand?), this would definitely be a compliment. Sand-bagging is in my view positive and honourable behaviour to prevent a major flood.
Best regards, Willem