Don’t Give an Unhappy Contract Party a Stick to Beat You With

The recent opinion of the Delaware Chancery Court in ITG Brands, LLC v. Reynolds American, Inc., No. CV 2017-0129-AGB, 2017 WL 5903355 (Del. Ch. Nov. 30, 2017) (PDF here), stands for the proposition that making a contract a bit less clear than it could be might be all that a disgruntled contract party needs to start a stupid fight.

Here’s what the parties were fighting over:

[ITG Brands] shall use its reasonable best efforts to reach agreements with each of the Previously Settled States, by which [ITG Brands] will assume, as of the Closing, the obligations of a Settling Defendant under the PSS Agreement with each such State, with respect to the Acquired Tobacco Cigarette Brands, on the same basis as the Settling Defendants prior to the Closing.

ITG Brands argued that “prior to the Closing” modifies “shall use its reasonable best efforts”; the court disagreed.

ITG Brands’s argument is sufficiently hopeless that I can’t be bothered to consider it here. (If it’s of interest, read the opinion or this blog post by Ira Meislik.) Nevertheless, ITG Brands thought it worth waging an expensive fight over. I suspect that if the language at issue had been a bit less meandering, ITG Brands might have restrained itself. How could it have been made more concise? As I don’t have the entire contract, I’m not inclined to speculate.

About the author

Ken Adams is the leading authority on how to say clearly whatever you want to say in a contract. He’s author of A Manual of Style for Contract Drafting, and he offers online and in-person training around the world. He’s also chief content officer of LegalSifter, Inc., a company that combines artificial intelligence and expertise to assist with review of contracts.

4 thoughts on “Don’t Give an Unhappy Contract Party a Stick to Beat You With”

  1. A drafter could express the same provision concisely as follows: ‘ITG Brands’ obligation to reach agreements with each of the Previously Settled States shall be whatever a court having jurisdiction deems appropriate’.

      • Wow! What a basic error. After seven months, the rest looks sickly, too.

        So here’s a second try, from scratch, to say the same thing more concisely:

        ‘ITG Brands shall make [reasonable] efforts to reach an agreement with each Previously Settled State under which agreement ITG Brands assumes the same obligations concerning the Acquired Tobacco Cigarette Brands that a Settling Defendant had before the Closing’.

        I put ‘reasonable’ between square brackets because I missed class the day you explained why ‘efforts’ needs to be modified by ‘reasonable’. Isn’t reasonableness implied? If ‘reasonable’ were omitted, would parties be enabled to claim that the contract permits or requires unreasonable efforts?


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