The Texas Supreme Court Doesn’t Like Cryptic Contracts

Thanks to Glenn West, I learned about the recent opinion of the Texas Supreme Court in Burlington Resources Oil & Gas Co. LP v. Texas Crude Energy, LLC (PDF here).

The fight was over a technical oil-and-gas issue that’s way above my pay grade. Both parties claimed the language was unambiguous and each offered a vastly different interpretation. The court resolved the issue in favor of one party, but Glenn thought I’d appreciate the court’s cri de cœur in footnote 10 (emphasis added):

Of course, neither party advocates the most literal reading of the “into the pipeline” provision, which mandates an absurdity. How can the royalty interest—not the oil itself but the royalty interest, an incorporeal concept—be “delivered . . . into the pipelines, tanks, or other receptacles”? We conclude that the rules of contract construction favor Burlington’s interpretation of this recondite clause. But the parties could have saved considerable time, money, and heartache if their cryptic language had truly been “delivered . . . into the . . . receptacle[].” It could then have been re-written to say exactly what the parties intend, without resort to industry jargon, outdated legalese, or tenuous assumptions about how judges will interpret industry jargon or outdated legalese. If you can’t understand what your contract means without asking the lawyer who wrote it, you should not be surprised later if judges—who can’t just take your lawyer’s word for it—also have trouble understanding what it means.

But the court was under a misapprehension. Generally, those drafting contracts don’t write or rewrite. Instead, they ride the copy-and-paste train. They don’t have the time, authority, or expertise to revisit every aspect of what they’re copying. And they sure don’t have the temerity to stop the train, dismantle the existing machinery, and replace it with something new.

That’s why change won’t come through individuals and organizations retooling their contracts. Instead, someone has to clear the decks and offer something new: automated, customizable templates that offer expert content, clearly expressed.

(What, you don’t know who Glenn West is! Go here to see my umpteen posts mentioning him.)

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.