Excuses for Sticking With Traditional Contract Language

Although no one publicly challenges my recommendations (see this 2018 blog post), I’ve occasionally encountered, in writing and in private exchanges with lawyers and law-school faculty, general arguments for sticking with traditional contract language. Here’s my taxonomy of those arguments.

Claiming That Traditional Contract Language “Works”

One such argument is that traditional contract language “works.” (See for example this 2017 blog post, about an exchange on Twitter in which someone described traditional contract drafting as “text that works.”) That assumes a binary world in which contracts work or don’t work. In fact, contracts are clear or less clear, working with them is less time-consuming or more time-consuming, and they present less risk of dispute over confusing prose or more risk. And caselaw is full of instances of confusing traditional usages causing a dispute.

Claiming That Traditional Contract Language Has Been “Tested”

A more nuanced argument against changing traditional contract language is that doing so would be risky—traditional contract language has been litigated, or “tested,” so it has an established, or “settled,” meaning.

Here’s how one commentator expressed it: “[C]areful writing can even be counterproductive if the result is to re-draft language that has been previously interpreted by a court as having a particular meaning. Ironically, in such a case, changing the words—even for the better—can only increase uncertainty.” Robert C. Illig, A Business Lawyer’s Bibliography: Books Every Dealmaker Should Read, Journal of Legal Education 585, 625 (May 2012) (here).

This argument suffers from three weaknesses, each fatal. First, because courts have scrutinized some traditional contract terminology but not the full range of contract usages, the notion of “tested” contract language applies only narrowly.

Second, the notion of “tested” contract language suggests that all courts ascribe the same set meaning to individual usages. That’s not so. How courts interpret usages depends on the circumstances of each case and the semantic acuity of the judge, and can vary over time and among jurisdictions.

And third, if parties to a contract had to ask a court to determine the meaning of a particular provision, that’s because the contract failed to state clearly the intent of the parties. Why rely on wording that created confusion? Instead, express meaning clearly, so you needn’t gamble on a court attributing the desired meaning to a contract. Courts have to clean up whatever messes they’re presented with, but I’m free to recommend ways to avoid confusion. The Delaware Chancery Court has acknowledged as much, noting “the difference between the roles served by courts and judges, on the one hand, and commentators like Adams, on the other.” GRT, Inc. v. Marathon GTF Technology, Ltd., No. CIV.A. 5571-CS, 2011 WL 2682898, at *14 n.79 (Del. Ch. 11 July 2011).

So although some lawyers will continue to claim that “tested” contract language is safer than expressing meaning clearly, it’s a lazy platitude.

Claiming There’s a Shared Understanding of What Traditional Contract Language Means

One encounters the suggestion that people who work with contracts attribute a given meaning to a contract usage, the implication being that that makes it so. (For examples relating to the meaning of efforts provisions, see page 703 of my 2019 article, here.) Attributing meaning in this manner faces three problems.

First, such statements rely on sweeping and often exaggerated generalization (Everyone would agree that …). That’s because the speaker is trying to express that this view is the conventional wisdom, and what level of support an idea must have to constitute conventional wisdom is necessarily nebulous.

Second, a bigger problem is that such statements rely on argumentum ad populum (also known as “appeal to common belief” and other names), the logical fallacy that a proposition must be true because many or most people believe it. Even if you can establish that a given understanding is widespread—that would seem to be the case with efforts provisions—that doesn’t mean it’s valid. Invoking argumentum ad populum is a reliable sign one has lost an argument.

And third, if a usage is clearly ambiguous, it does no good to claim that people who work with contracts think it expresses only one of those meanings. That’s the case with material, as I’ll show in an article that I hope will appear later this year.

Claiming That Traditional Contract Language Means What People Think It Means

A law-school faculty member told me I was wrong regarding efforts standards: words mean what people think they mean, so an efforts standard in a contract means whatever someone drafting or negotiating that contract thinks it means. But that explanation doesn’t apply to interpreting contracts.

The idea that words mean whatever people think they mean features in debate over the changing meaning of words and phrases. On one side you have those who bemoan the tendency of speakers and writers to debase a word by extending it beyond some ostensible proper meaning. On the other side, you have those who think it futile and wrongheaded to stand in the way of changes in language. Saying that words mean what people think they mean is one way of acknowledging that the latter camp has a point. (This sort of debate is part of broader skirmishing between “prescriptivists” and “descriptivists.”)

Such debate takes place because the meaning the speaker attributes to the usage in question—whether it’s fulsome, literally, or some other contentious word or phrase—is clear. If someone says, “I’m so hungry I could literally eat a horse,” it’s clear that they’re using the word literally to add emphasis, as opposed to using it to emphasize the exact truth of the statement. To anyone inclined to quibble, the issue isn’t that the meaning is unclear, it’s whether it hews to some orthodoxy.

This sense of words meaning whatever someone thinks it means doesn’t apply to disputes over confusing contract usages. In a dispute, the question is not whether a clear meaning inappropriately fails to follow convention, but what meaning the parties attributed to a given contract usage.

Claiming It’s Risky to Eliminate Traditional Usages

Related to invoking the notion of “tested” contract language is claiming it would be risky to drop any entrenched usage, whether or not it has been endorsed by courts. The fear is that if a deal community employs a given usage to express a given meaning, employing a different usage to express the same meaning could result in mischief.

One can sympathize with this reservation—up to a point. A counterparty might push back against the new usage, so it takes longer to close the deal. For example, seeking to eliminate represents and warrants from mergers-and-acquisitions contracts in favor of states would probably be more trouble than it’s worth, at least now. As for litigators trying to attribute an unexpected meaning to the new usage, that would seem to involve little risk. The point of dropping a traditional usage is that it’s suboptimal and its replacement is clear. It’s difficult to make mischief with clear.

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So those arguments are weak, except for the last one, which is half right. That these arguments are offered at all is a sign of the black-hole force underlying them—inertia.