One of the many tasks that a commercial lawyer is asked to perform, is to draft or revise standard “terms and conditions”.
As an aside, the expression “terms and conditions” (or the shorter “ts and cs”) is probably best avoided in a legal setting. The phrase has become part of business jargon, where it is shorthand for standard contractual provisions, such as those which a business seeks to apply to its sales or purchases. As with some other business jargon (eg “due diligence” or “partner”), commercial usage has become a little detached from the original legal meaning.
In traditional English law usage, a condition (sometimes known as a promissory condition, to distinguish it from a contingent condition, such as a condition precedent) is an essential term of a contract, breach of which entitled the other party to terminate the contract. By contrast, a warranty, or term, of the contract, is sometimes understood as a less important provision, breach of which entitled the other party to claim damages but not terminate the contract.
In IP Draughts’ view, this traditional distinction (which is used, for example in the UK Sale of Goods Act 1979) has outlived its usefulness in modern contract drafting practice. Most modern contracts specifically address when a party can terminate for the other party’s breach.
Using the expression “terms and conditions” as a commercial shorthand for standard contract provisions is unlikely to cause legal problems in most situations, but IP Draughts prefers to avoid using legal terminology in this way.
Drafting the blighters
Occasionally, IP Draughts is instructed to draft, or update, a client’s standard contract terms. He is currently working on a project to draft standard terms for use by a medical research charity when funding research at universities. Although he has been doing similar work for about 30 years, he still finds it a difficult task to do well and efficiently.
Part of the problem lies in getting clear instructions from the client. They sometimes have a vague idea that they would like their terms to be updated or checked by a lawyer. But they are not intimately aware of why each of the present terms has been included. Sometimes, a term is so “bespoke” that it wouldn’t have occurred to IP Draughts to include it, if it were not already present. No-one in the client organisation knows why it is there. But who is to take responsibility for deleting it from the new standard terms? IP Draughts may have to spend time in discussing its potential implications, the risks associated with deleting it, and so on. This might not be a good use of an expensive lawyer’s time.
A further issue is how to price the task. Should allowance be made for the discussions referred to above? This might result in a price that is difficult for the client to accept.
Who should be doing the drafting? IP Draughts is aware that in many firms, reviewing standard terms is a task for a trainee or junior solicitor. This has the advantage of a low hourly rate, but how good is the review going to be? It is likely to be a desk-based review rather than one that considers the commercial needs of the business.
In the project on which IP Draughts is currently working, he quoted with explicit assumptions, namely that the client wanted simple, standard terms that IP Draughts would base on one of his templates, and that he could ignore the client’s existing terms which are rather detailed and complex. However, the senior executive who agreed the price and the assumptions is not the same person as the manager who has operational responsibility for agreeing terms with universities. The manager, understandably, wants to understand why IP Draughts’ terms are different to those she is used to working with. This has resulted in many hours being spent in discussing the existing terms and the implications of removing the protection given by those terms. IP Draughts’ budget for this project has turned out to be too small.
There is no major deal in the offing, as there would be when drafting a contract for a transaction. So, there is no commercial context in which to assess the value of a lawyer’s contribution. It is human nature that clients tend to undervalue the lawyer’s contribution in drafting standard terms.
IP Draughts doesn’t have an answer to this conundrum. Do readers have any suggestions?