Is It Ever OK Not to Be Clear in a Contract?

Yesterday I had an exchange on Twitter with Pam Chestek, aka @pchestek, proprietor of the Property, Intangible blog. (You’ll see next month my article that sprang from a fruitful discussion I had with Pam a few months ago.)

Yesterday’s exchange was prompted by my post on paid-up and royalty-free (here), but it strayed into the role of clarity in contracts. Here one relevant extract:

And here’s another:

My take on this topic is that you should strive to make everything in your contracts clear.

Two deal-making strategies come to mind when I think of contract clarity.

First, the other side might take a position on a particular usage that you don’t agree with. For example, they might think that best efforts means more than reasonable efforts—crazy, I know!—and are unwilling to budge from best efforts in a particular provision. If I wanted to do the deal badly enough, I’d say, “I’m willing to leave best efforts in the contract, but I disagree with you about the the legal effect of best efforts. If it becomes an issue down the road, we might have a fight on our hands.” But taking that position doesn’t involve tolerating lack of clarity, because I’d be clear about where we don’t have a meeting of the minds.

And second, the parties might elect to leave stuff out of a contract. That can be a legitimate tactic—if negotiating an issue is likely to take a lot of time or generate ill-will and the likelihood of that issue ever becoming relevant is slim, the parties might elect to sidestep it and instead address it down the road if it comes up. This too doesn’t involve tolerating lack of clarity. Instead, you’re kicking the can down the road.

So those two strategies pertain to uncertainty, not lack of clarity.

There’s a third strategy that I don’t endorse—gamesmanship. That’s where you deliberately introduce confusion with the aim of springing an unexpected interpretation on the other side if at any point it offers you an advantage. I don’t want to include land mines in my contracts. I wrote about gamesmanship in an oldie-but-goodie 2007 blog post (here). Here’s the gist of what I had to say:

My problem with gamesmanship is that it’s deceitful. If that doesn’t pose any ethical problem for you, consider the practical implications: If the other side catches you playing any of these games, it could sour your client’s relationship with the other side, resulting in your client missing out on future deals and your losing your client’s business. It could also inflict more general harm on your professional reputation. And playing games with ambiguity can result in your being hoisted by your own petard.

Regarding the last of those implications, in this 2009 post I wrote about a case that showed that the Delaware Chancery Court likely wouldn’t look kindly on one kind of gamesmanship, “creative ambiguity.”

[Updated July 29, 2015: And in a comment to this post, Vinny mentions vagueness—use of words like promptly and reasonable. I suggest that that too pertains to uncertainty and not lack of clarity. Yes, vagueness can give rise to dispute in borderline cases, but in the right circumstances it’s your best choice.]

So I recommend you ensure that everything in your contracts is clear, that you be clear about any points where the parties don’t have a meeting of the minds, and that you not indulge in gamesmanship. Regarding leaving stuff out of a contract, make sure that it’s a deliberate choice after considering the risks, and not the result of oversight.

The above extracts might not accurately reflect Pam’s views, in which case she’s welcome to chime in!

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.