Contract drafting: art or science?

volunteerContracts are voluntary. Two or more persons come together and agree to be legally bound to one another to do things, such as make payments, perform work or deliver goods.

Subject to a few basic requirements, the law provides remedies to ensure, or at least incentivise, parties to meet their contractual obligations. Those requirements are of different kinds. There are the technical ones for a contract to exist – offer and acceptance, consideration, requirements for writing, etc. There are the public policy ones – eg obligations to do illegal things are not enforceable. There are a few others “at the margins”, eg occasionally contracts may be void for mistake, while insurance contracts are subject to greater obligations of disclosure than most contracts. There are rules on how to bring a breach-of-contract case and as to the remedies that can be obtained, but they need not detain us here.

where's the beefUsually, these requirements and rules are in the background. They provide a context for parties who enter into a contract, but they are not usually at the forefront of the parties’ minds. Instead, they care about the substance of their obligations to one another – the content of the contract.

English law cares little about that content. It is a private matter for the parties to agree. The law implies certain obligations into the contract, usually only the bare minimum to make the deal work and usually only to deal with points that the parties haven’t thought about and agreed explicitly.

The court’s main roles in a contract dispute are to work out what the parties have agreed (including any implied terms), and then work out whether they have done what they agreed to do. Often, these roles require the court to do two things: (1) identify and interpret the terms of the contract, and (2) decide what the relevant facts are, eg as to their conduct in relation to the contract.

The latter task is often messy and takes most of the time of the court – hearing witnesses, reviewing records etc. At the time of entering into the contract, this messiness is all in the future. Negotiations sometimes seem to assume a strict adherence to the procedures set out in the contract; in practice this rarely happens.

whisperThe task of construing the contract relies more on the analysis of words than the hearing of evidence of who said what to whom etc. Usually. In an ideal world. In reality, the evidence sometimes intrudes and influences the judge in his analysis. Sometimes this is considered necessary to do “justice” in the case. Anyway, judges are not computer programs and are not always consistent in their interpretation of the words used. Whisper it quietly, but some of them are not very good at linguistic analysis.

Yet, it is not a free-for-all. There are some rules on how the contract should be construed. Parties are assumed to have agreed the terms set out in a signed written contract. What those terms mean depends on the words used and how they are interpreted. Words can mean different things to different people. English law is usually interested in what those terms mean to an outsider who has the background facts. In other words, not the subjective views of the parties.

So, when it comes to interpreting contracts, there are some pressures in favour of strict linguistic analysis, and some towards a more human approach that relies partly on how the parties are perceived to have behaved. This makes it difficult to predict how a court will interpret and apply a contractual obligation. It also depends partly on the court. In the past, IP Draughts has challenged a barrister who advised that a County Court would not hold a party to do something within a strict time limit set out in the contract, as a condition of exercising certain contractual rights. Surely the contract was clear and should be enforced by the court, IP Draughts queried. Perhaps you might get that approach from some Chancery judges in the High Court, sniffed the barrister. But not in the County Court. Not on this fact pattern.

There are limits to how far good contract drafting will take you, if your objective is to win in court. But there are other reasons for drafting contracts well. Having clear contract terms may help the parties to avoid a dispute over their meaning, so that they don’t need go to court.

Thus, excellence in contract drafting and excellence as a contract lawyer are overlapping circles in the Venn diagram of commercial life, but they are not identical or even sub-sets of one another. Sometimes, as a lawyer, doing one’s best for a client may involve drafting a contract in a way that could be viewed as sub-optimal from a pure contract drafting perspective. This should never be used as an excuse for shoddy drafting.

So, is contract drafting an art or a science? Viewed as a discipline where clarity, consistency and lack of ambiguity are among the main requirements, it may be more science than art, more like a computer program than a literary essay.  For jobbing lawyers who have to deal with messy realities of life, the scientific approach has its place, but other factors may also need to be considered. These factors may include:

  • being asked to start with a template agreement whose terms have involved over time, and where the client may be both unclear on why some of the terms are present and reluctant to drop provisions that may provide theoretical protection
  • pressure from parties and their lawyers in negotiations, where sometimes it is necessary to keep one’s powder dry for the most important revisions
  • lack of time or budget to improve the drafting to the extent one would like
  • prioritising a favourable interpretation in court over clarity in drafting, if (as sometimes happens) the two conflict, eg by using jargon that one knows the court will understand, even if the parties find it difficult

As conflicting priorities and other human factors intrude into the drafting process, a more ad hoc approach to drafting is likely to be taken. This approach could be viewed as closer to an art form than a scientific process. Whatever approach is taken, the drafting should reflect a set of drafting principles that place a high priority on clarity and accuracy.

 

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Put the dates in your diary (please): 4 & 16 September

courseThe first event in IP Draughts’ Summer and Autumn programme of courses took place earlier this week – Drafting Legal Clauses in Commercial Contracts. This course has been running in different formats for over 15 years.

The next events, subject to bookings, will be:

4 September – Contract Drafting: an Advanced-Level Workshop

16 September – Intellectual Property Licensing: an Advanced-Level Drafting Workshop

Further details on these events, which are held in central London, can be found here.

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Is it career-limiting to practise IP law?

This provocative thought is prompted by considering the careers of two prominent lawyers and judges, and comparing them with those of specialist IP judges. IP lawyers who become judges seem to reach a glass ceiling at appeal court level.

Baron Neuberger of Abbotsbury

Lord Neuberger, before he became President of the Supreme Court

Lord Neuberger, before he became President of the Supreme Court

IP Draughts calls as his first witness Lord Neuberger, the current President of the UK Supreme Court. Lord Neuberger has the necessary skill-set to have been a successful IP barrister, and in fact he has been involved in judging some of the leading UK patent cases of recent years. His scientific aptitude is demonstrated by a chemistry degree from Cambridge, while his clarity of thinking and writing can be seen in his judgments and speeches. When IP Draughts ran Lord Neuberger’s judgment in the recent patent case of Virgin Airways v Zodiac through the BlaBla Meter, he scored 0.15, which is a phenomenally good score. Instead, fate took David Neuberger to Falcon Chambers, a set specialising in property law.

A few years ago, IP Draughts sought advice from specialist insolvency counsel on behalf of a university client. The question was whether patents could be assigned to a spin-out company on terms that enabled an automatic reversion of the patents if the spin-out company went into liquidation.  This is a notoriously difficult objective to achieve. Counsel’s best line of argument – an assignment of a determinable interest – relied for authority on comments from Neuberger J in a non-IP case, Money Markets v London Stock Exchange [2002] 1 WLR 1150, where he said:

It does appear well established that an interest granted on the basis that is inherently limited on insolvency is recognised by the court. In other words, a determinable interest, that is an interest with a limitation until insolvency, is valid, see the discussions in Snell’s Equity, Underwood and Hayton, and Professor Goode’s book and the passage quoted above from Fry LJ in Ex p Barter, ex p Black, ex p Walker (1884) 26 Ch D 510 at 519–520. It must, I think, follow that an interest granted on the basis that it is inherently limited on some other event is effective, even if that event occurs on or after an insolvency.

A full discussion of this legal issue must wait for another day. IP Draughts’ general point is that Lord Neuberger’s stellar career has intersected with IP at various places, but he has not been a specialist IP barrister. Might his career have been more limited if he had practised at the IP bar? Would he have become Master of the Rolls and then President of the Supreme Court? Based on the precedents of specialist IP judges, IP Draughts wonders.

Viscount Alverstone of Southampton

Lord Alverstone

Lord Alverstone

IP Draughts’ second witness may be less familiar to present-day lawyers: Lord Alverstone, who was Lord Chief Justice from 1900 to 1913. His witness statement takes the form of a book of memoirs, titled Memories of Bar and Bench, published in 1914. Some years ago, IP Draughts’ friend Edmund Longshanks QC gave IP Draughts a second-hand copy of this book. Before his elevation to the Bench, Lord Alverstone’s name had been Richard Webster. Webster had a very successful career as a barrister, appearing in most of the leading patent cases of the day, and taking instructions from clients as diverse as Lord Kelvin, Thomas Edison and Florence Nightingale (and from leading firms of solicitors such as Linklaters). The summit of his career as a barrister was being appointed Attorney General, at which point he had to turn his hand to prosecuting criminal cases, including that of the famous murderer, Dr Crippen.

Dr Crippen

Dr Crippen

In his book, Lord Alverstone emphasised the importance to his career of not allowing himself to be typecast as a patent barrister. He maintained a broad commercial practice before becoming Attorney General. For instance, he handled many railway compensation cases (compensating landowners whose land was taken over by the railways) and was leading counsel in a Board of Trade enquiry into the Tay Bridge disaster.

Admittedly the world was less specialised in the late nineteenth century than it is today. But the lesson that IP Draughts takes from these two examples is that if you focus predominantly on IP law, you may find there are some natural limits to your judicial career, no matter how talented you are. IP judges in the UK seem to get no further than the Court of Appeal, while the summit of US IP judges’ careers may be to become Chief Judge of the US Court of Appeals for the Federal Circuit. It would be interesting to see a specialist IP judge in the Supreme Court of either jurisdiction.

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Interview with UCL Teaching and Learning

ucl teachingRecently, IP Draughts was interviewed by UCL’s Teaching and Learning group about his views on professional training courses. This morning, he learnt from a tweet from UCL Faculty of Laws that a write-up of the interview had been published.

The full, published text of the interview follows. It reads much more coherently than it was spoken, thanks to some deft editing and reorganisation of material by the article’s author, Luke Davis of UCL.

tweet ucl (2)

 Just two years since its launch, the Faculty of Laws’ intensive five-day continuing professional development (CPD) course on IP transactions has already collected an impressive array of accolades.

As well as scooping the inaugural CPD and Short Course prize at the 2014 Provost’s Teaching Awards, Intellectual Property Transactions: Law and Practice also won praise at the 2013 Law Society Excellence Awards. Students seem to rate it highly too, with the last intake of participants giving it a score of 3.67 out of four.

So who better than course designer Mark Anderson to reveal the hallmarks of an effective course? Here are his five key points

1 Be niche

“This year, one of our practitioners travelled from South America to attend the course. She told us that she had done lots of research and this was the only course she could find on this topic. We actually believe this is the only course of its type in the world.

“Focusing on a very specific area – in this case intellectual property transactions – not only minimises the competition; it also means we can focus on the topic in depth.”

2 Be focused

“I’ve been attending CPD courses since I qualified as a lawyer back in the 1980s. At that time, the typical model was an all-day session, and I found an awful lot of were very mediocre.

“You could have up to eight speakers a day, and they would all do their own thing with no unifying focus. That’s something I tried hard to remedy on the IP Transactions course. I design the programme and give clear guidance to contributors on the required content. We all use the same templates for the course documentation, which also helps to give an impression of coherence to the students.”

3 Be good value

“I came away from those early CPD courses and thought, I’ve only taken away two nuggets of useful information in a day – and if I’d already read the textbook on the topic, I might not have learned anything at all. That doesn’t justify the cost of the course. What people want to know is how to apply the knowledge in real life.

“A target for anyone giving a 45-minute talk is to provide the top half-a-dozen really valuable bits of information. Real value means teaching things you could only learn from practitioners.”

4 Be interactive

“We aim to make the course lively, interactive and intense. We do that by using a mixture of lectures on the law, lectures on the practice and workshops in which participants can apply that knowledge.

“Each workshop is introduced the day before as part of an initial group discussion. That means that at least twice a day students have to interact and speak out.”

5 Be practical

“Teaching based on real life situations is far more effective than focusing on the theory in isolation.

“In the workshops, we draw up practical scenarios and then pose a series of questions as to problems that may arise. In the past I’ve also invited attendees to work in a real-life situation, for example, by forming two teams to represent different organisations that are negotiating a contract.

“I’ve found that this method still allows you to communicate the same level of technical academic knowledge – in this case, intellectual property and commercial laws. 

“Some people find it easier to learn starting from the practical application, rather than from the textbook, though the learning points may be the same. This method is especially effective when teaching a CPD audience, who already have some practical experience of the subject.”

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