Should Contract Provisions Mean What Most People Think They Mean?

This recent post was about John Coyle’s great article on governing-law provisions. But I didn’t mention in that post the part of the article that endorses the notion that courts should interpret contract provisions consistent with what a majority of lawyers think they mean.

Here’s how the article summarizes that notion (footnotes omitted):

The Article’s second contribution to the literature is to determine whether these canons produce results that are broadly consistent with the expectations of most contracting parties. To answer this question, the Article draws upon data gleaned from eighty-six lawyer interviews and e-mail exchanges in which the subjects were asked how they wanted the courts to interpret their choice-of-law clauses. This methodological approach—which looks to lawyer surveys rather than to a close reading of the contract text—represents a somewhat novel approach to contract interpretation. It is, however, in keeping with a burgeoning body of contract scholarship that relies on interviews and surveys to assist in the interpretation of contracts. The data gleaned from these lawyer interviews and e-mail exchanges suggest that at least two of the canons listed above regularly produce results that are inconsistent with the expectations of most contracting parties. Accordingly, the Article argues that the courts should cast these canons aside. In their place, the courts should adopt different interpretive default rules that are more in line with party expectations.

How does this relate to me? John and another law-school professor have suggested that this approach applies equally to my analysis of efforts provisions. In my recent article (see this blog post), I cheerfully acknowledge that most people who work with contracts buy into the notion that different efforts provisions impose different levels of onerousness. John says that for him, that “cuts in favor” of courts recognizing those distinctions.

Regarding efforts provisions, I’ll let you read the article. In this post, I’ll explain more generally why I think law-by-survey is hopeless.

Seeking Order in Chaos

The contract-drafting industry runs on copy-and-paste. That’s the process whereby smart people endlessly recycle semiliterate, misbegotten crap. As a result, what people think about a given bit of verbiage often bears no relation to what objective analysis would suggest.

For example, over the years I have asked dozens of people about the utility of using both indemnify and hold harmless. Those who endorse using both never do so by citing reasoned analysis. Instead, they rely on conventional wisdom, often prefaced by “Someone told me that ….”

And consider the dreaded successors-and-assigns provision. It’s a fixture in contract boilerplate, so presumably large number of lawyers would be willing to say that it’s useful. But I searched high and low for a worthwhile purpose for the successors-and-assigns provision, and I came up empty. (See this article.)

I could go on. And on.

If you base the law on what most people think, you would get law by argumentum ad populum. That’s the logical fallacy that a proposition must be true because many or most people believe it. How many people ascribe to an idea is not proof that it’s valid. Relying on argumentum ad populum is a sure sign one has lost an argument. And that’s the case here.

Yes, courts should be alert to what people think. But that’s just a starting point.

Of course, if lawyers doing deals either are equipped only with misbegotten conventional wisdom or are copy-and-paste monkeys, that means courts have to attribute to disputed provisions a meaning that the drafters likely didn’t have in mind. Well, what do you want—the system is broken. The solution isn’t law-by-survey. Instead, you fix the system, slowly, laboriously, methodically. That might not be realistic, but it’s the job I’ve signed up for.

Survey Methodology

While I’m at it, the notion of law-by-survey raises some questions of methodology. Why survey just lawyers? How about clients? And not just people involving in negotiating the deal—how about people involved in monitoring performance? And doing what kinds of deals? In which jurisdictions? Do you need a majority to “win,” or is a plurality sufficient? What do you do when instead of clear choices, you have many permutations that shade into each other? And for each question you’d have to provide the option, “I don’t have a freaking clue.”

Given these issues, it’s just as well that the idea doesn’t work.

The Drafter’s Perspective

As the drafter, you can sidestep what people think and instead do what makes sense. That would likely require winning over hearts and minds. You fight the battles you can win, and you make whatever strategic concessions you need to.

Stay Tuned

John Coyle has agreed to do a “City of Contracts” podcast with me. I’m sure we’ll discuss this, as well as governing-law provisions, jurisdiction provisions, interpreting boilerplate, and other nerdy-but-compelling stuff.

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.