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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