Yesterday’s “Drafting Clearer Contracts” seminar for the Utah State Bar included something new and different—an hour on professionalism and ethics.
Legal ethics can be a narrow topic, but with the addition of “professionalism,” I allowed myself to expand the discussion to address different ways one can create problems for oneself in the contract process by being sneaky and the bad things that can happen as a result.
The ways of being sneaky include intentionally incorporating ambiguous language in a contract and making last-minute unmarked changes, to choose two examples at random. As regards the possible adverse consequences, here they are:
- Delay, confusion, and rancor
- Violating codes of ethics
- Negligence claims (from clients, third-party beneficiaries)
- Fraud claims (from counterparties)
- Having the contract held unenforceable
The point is that they go beyond ethics violations.
Two points:
1/ “Sneaky stuff” in contract drafting is a big area to discuss, and complex. Anyone who screws up because she wasn’t paying close attention loves to try to shift blame to the other side by “ethicalizing” the issue.
2/ “Deliberately using ambiguous language” is a likewise big and complicated subject. To touch two items:
(a) Sometimes ambiguous language is used to “kick the can down the road” where nailing the issue down on some remote contingency would entail rancor and delay and endanger the overall deal. Nothing unethical about that.
(b) Assume Acme wants Y, and Widgetco “sneakily” proposes language on the point that supposedly embodies Y but is actually ambiguous between Y and Z, where Z is more favorable to Widgetco. Widgetco secretly means to contend for meaning Z if the issue ever arises on a scale that makes it worth the trouble. Acme accepts the language, thinking it embodies Y. Deal closes. At the time it’s negotiated, it’s unclear whether the Y/Z difference will ever matter, but Widgetco thinks it has bought itself a little bit of leverage if an unlikely contingency happens. How would you analyze that scenario? And, does it break down into “ethical” and “drafting” components, or is it all one?
Aw’right’s comments touch on a wider point, which is the practice of negotiating through the contractual language, rather than negotiating the issue then recording the agreed conclusion in clear (and perhaps MSCD-compliant) language. This practice can result in “shaving the meaning” through successive drafts, with the final outcome a misshapen mess. Rationalising this practice, as some do, by saying that it gives a party room for manoeuvre as to the meaning, seems to me misguided and contrary to the spirit (ethos?) of MSCD.
Ken, I’m glad you’ve incorporated professionalism in your seminars. I’ve been advocating professionalism among business lawyers. See http://www.archerlaw.com/files/franco_article_june_2012.pdf. – Franco