Do I Ignore What Courts Might Say? What the Other Side Might Say?

In case it’s of interest, below is my response to feedback I received from someone who attended one of my recent international seminars. The first issue discussed is one I also addressed in this recent post.

I’m pleased that you found the seminar worthwhile, but of course what particularly caught my eye was your final comment:

Appreciate your crusade for clarity, even pointing out where the courts are wrong. Us business lawyers have to balance two factors: (1) how we anticipate the courts will read what we write and (2) what can be agreed with a counterparty. When making your points, you sometimes—I assume for the purpose of showing clarity—ignored those two elements.

These are two issues that are dear to my heart, so I hope you don’t mind if I give you my thoughts.

What Courts Say

Regarding the first issue, I don’t ignore what courts say (or at least don’t intend to)—it’s a bit more subtle than that.

I don’t look to court opinions to tell me how to express deal terms clearly. If I were to do that, for the following reasons I’d be on very uncertain territory:

• Courts are in the business of making sense of contract language that didn’t work, in that the parties couldn’t agree on what it meant. That’s exactly the kind of language that one doesn’t want to include in contracts.

• How courts handle a given dispute is often a function of the circumstances and the semantic acuity of the judges, so what courts have to say about a given contract usage can vary depending on the jurisdiction or vary over time within a given jurisdiction.

• You can’t rely on judges to know what they’re talking about, as they often reach conclusions that are debatable or flat-out wrong. See for example this recent post.

Instead, I look to court opinions for lessons as to what contract usages I should avoid because they create confusion. I also look to court opinions to see whether there’s any language I should avoid because judges have odd ideas about it. Finally, I also look for those rare instances where courts make it clear that particular language is necessary or sufficient to achieve a particular goal, whether it makes sense or not. That’s why in the third edition of MSCD I cite dozens of court opinions from the U.S., England, Canada, and Australia.

In adopting this approach, my aim to allow drafters to express deal terms in language that isn’t susceptible to confusion, whether on the part of contract parties or judges. So it’s not a matter of my ignoring how courts might react to contracts drafted according to MSCD guidelines. Instead, I have in mind that judges wouldn’t have occasion to react to it, because there would be no dispute.

Here’s just one example of how this might play out: In a footnote to a 2011 opinion, Chancellor Strine of the Delaware Chancery Court (the leading business-law court in the U.S.) mentioned the second edition of MSCD.  (See this post.) To paraphrase, Chancellor Strine said that although Adams proposes a novel way to address the issue of “survival,” we, the court, have to make sense of what we’re given. I have in mind that in the future, using MSCD‘s recommendations regarding “survival” and other matters would spare drafters from having their contracts give rise to disputes that come before Chancellor Strine.

Pushback from the Other Side

Regarding your second point, during the seminar we consider what contract language makes most sense. At the end of the seminar we discuss briefly the possibility that the other side might object to some MSCD-compliant language. But I wouldn’t exaggerate how much of a problem such pushback poses. For one thing, if I were a loose cannon, MSCD wouldn’t be as widely used as it is. Furthermore, it’s standard deal etiquette that the other side should comment only on stuff that matters for the deal.

You can nevertheless expect to encounter such pushback occasionally, which is why I suggest that you might want to preempt it: when you send out a draft that complies with MSCD guidelines, you could include in your cover note language of the sort recommended in my model “statement of style for contract drafting” (here). In recent months I’ve encountered people who use just such a cover note.

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Thank you again for your feedback. I attempt to address these points in the seminar, but I’ll make sure that I do so more clearly in the future.