Category Archives: Contract drafting

Plain and intelligible words, but complex meaning

The latest edition of Legal Studies, the journal of the Society of Legal Scholars, has appeared on IP Draughts’ home desk. Curiously, it has not been caught by the Post Office’s filter, which is redirecting professional correspondence to his firm’s new offices, including the Orvis catalogue.

The contents page of Legal Studies is on the back cover, and this month lists 10 research articles, 9 of which are of no interest to IP Draughts. The 10th looks more promising. It is titled Assessing plain and intelligible language in the Consumer Rights Act: a role for reading scores. The reference is Legal Studies (2019), 39, 378-397.

The authors are academics at the University of Nottingham. Two of them, Conklin and Parente, are from the School of English, and the third (and “corresponding author”), Hyde, is from the School of Law. More and more promising.

Dr Richard Hyde

As the title of the article suggests, it examines whether techniques that are used to measure readability, and which produce “reading scores”, could usefully be applied to determine whether consumers are likely to understand the contracts that they are asked to sign. And whether reading scores might be used by a court when deciding whether a consumer contract meets the requirement that it be written in “plain, intelligible language” as required by the EU Unfair Terms Directive, implemented in the UK by the Consumer Rights Act 2015.

The authors ran an experiment. First, they set up a method of averaging out the reading scores produced by 5 standard techniques, including the well-known Flesch-Kincaid test. Then they applied the techniques to 7 examples of consumer travel insurance contracts found on the internet. One of the outputs of their research was a “grand weighted mean” that decided how many years of education a person required in order to understand the contract terms. These varied between 13.86 years (second year of university) for one of the contracts, and 19.06 years (beyond a masters degree) for another.

Of course, these extraordinary results may be partly down to imperfections in the standard techniques for calculating reading scores, rather than being solely attributable to the impenetrability of insurance contracts. But the results should make the lawyers who draft insurance contracts sit up and take notice.

The article is more thoughtful than the above summary might suggest. At the start of the article, the authors seem doubtful about the multi-factoral tests applied by judges in such cases, which make it difficult for a business to predict what a judge will accept. They seem to be suggesting that plain, intelligible language  might best be decided by an algorithm. But by the end of the article they seem to acknowledge that the subject is more complex than existing tests are able to address. So, perhaps there is a role for human judges, after all.

IP Draughts is not an expert in reading tests. But he wonders whether they can do anything other than assess clarity of expression. If the underlying concepts are difficult to grasp, that is a separate issue and one that is unlikely to be testable by an algorithm. Protecting the consumer from terms whose concepts are difficult to understand may be more of a question of whether the term is “fair” rather than whether it is clearly expressed.

 

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You can’t be both accurate and clear. Really?

This post is prompted by two events. First, IP Draughts is preparing course materials for a new, one-day training event that he will be adding to his suite of courses on IP and contract subjects. Contract Drafting: Skills Workshop will be advertised on the UCL Laws Events pages in the coming weeks.

This practical course will focus on four aspects of contract drafting – clarity, accuracy, conciseness and consistency – of which the first two are the most important. He has found lots of examples of really bad drafting (including some in industry-standard agreements) for students to work on and improve during the day. The potential conflicts between clarity and accuracy, in the context of contract drafting, are on his mind.

Second, a tweet of his from 2016 has come back to bite him. He disagreed with, and replied robustly to, someone who opined:

If you know enough to say it’s correct, you know too much to say it’s clear. No one can judge both clear and correct.

Recently, he was called out on his comment. In the echo-chamber of Twitter, people take sides. So be it.

Of course, context is all, and the context of the comment quoted above was forms that explained medical matters to patients. The general theme was that experts – in this case doctors – could judge the accuracy of the information that they provided but not whether it was understood. Being an expert, and knowing how to make the information accurate, precludes you from judging whether the information is clear.

IP Draughts disagrees with this opinion. But he can see where it is coming from. He occasionally sees patient information leaflets, e.g. those used in clinical trials. Often, they are unclear and poorly drafted, and seem too complex for a member of the public to understand. When he has raised this with clinicians, the reaction has been that ethics committees require all the information to be provided. The attitude of many in the medical profession seems to be that accuracy is more important than clarity.

Many lawyers that IP Draughts knows could improve the clarity of those documents. Understanding complex technical information, reducing it to its essentials, and communicating it clearly to the non-specialist – whether it be the judge or the businessman – are some of the core skills of a good IP or commercial lawyer. Perhaps those skills are not often directed to what a member of the general public would understand (though our colleagues in countries that have jury trials for IP cases may disagree). But the general idea of translating expert information for use by the non-expert is a familiar one. Some lawyers, and some clinicians, are better than others at this skill.

With an organisation as large and sluggish as the UK National Health Service – the fifth biggest employer in the World – changing attitudes and behaviours can be very difficult. Perhaps we should be more supportive of those who are trying to improve the clarity of patient information. The irony is not lost on IP Draughts that his Twitter comment was objecting to the accuracy of a statement, when perhaps he should have been focussing on its clarity and whether it conveyed the right message to its intended readers.

But can’t we have both? Coming back to contracts, can’t we expect the wording to be both accurate in its description of contractual obligations, and clear to the reader, whether they be a commercial manager, lawyer or judge? There may be some areas – liability clauses spring to mind – where the drafting uses legal terms of art that may not be understood by non-lawyers. This may be inevitable in a limited number of areas. But on most subjects, contracts should be both clear to the non-specialist and technically accurate. That is the balancing act that we all have to keep practising.

 

 

 

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Dealing with overseas legal issues

Driving in France: do you have a high-vis vest, a warning triangle, and a breathalyser in your car?

Anyone involved in negotiating IP agreements is likely to come across this issue: how do you deal with a different law to your own? This question arises in different ways, including:

  • when negotiating which law and jurisdiction is to apply to your contract, or advising a client on this subject.
  • when deciding, during negotiations, whether to modify contract wording that appears to have been drafted to reflect another country’s laws.
  • when interpreting the wording of an existing agreement.

On the first point, the traditional approach of a law firm, such as the one in which IP Draughts spent 7 years, was to drum into associates the need to push the decision firmly back to the client as a commercial, rather than legal, issue, and to make clear that advice should be sought from lawyers who were qualified to advise on any law that the client might be contemplating as the law of the contract.

That advice is sound but sometimes less than helpful, particularly on smaller-scale transactions where the client cannot justify the costs of instructing a second set of lawyers. It is also true that junior associates cannot be expected to have experience of what legal issues arise in other jurisdictions, or when contractual language has been tailored to address the specifics of another country’s commercial laws. In the absence of support from a partner or more experienced colleague, it may be unrealistic to expect much support from the junior associate.

But clients aren’t always thoughtful enough to realise the limitations of their individual adviser. They may just think of them as representatives and mouthpieces of their firm, and expect them to know and communicate what the most knowledgeable lawyer in the firm knows. This is, frankly, unrealistic in most cases.

These thoughts are prompted by several recent experiences:

  1. Negotiations over a research collaboration agreement with a Belgian lawyer, who was keen to clarify that a contractual obligation should be expressed as a contract of means and not a contract of results. IP Draughts’ past experience of this distinction in the wording of civil law contracts (both in negotiations and when writing one of his books with the support of lawyers in other countries) was helpful in understanding what the Belgian lawyer wanted to express, which in fact was a reasonable request in context, though the contract was to be made under English law.
  2. Preparing material for an in-house version of IP Draughts’ talk Introduction to Contracts. The talk is to be given to research contracts staff in a Scottish university, and he thought it would be useful to include a few slides on the differences between Scots and English law; thanks are due to our work experience law student, Francesca Conroy, for her research on this point. His standard materials for this talk were written from the perspective of English law. He has learnt that there is an expression used by lawyers called “kilting a contract” to make a (typically English law) contract suitable for use under Scots law, and that the differences include issues such as an absence of deeds, signing formalities, limitation periods, and a less well-established meaning for the expression “subject to contract”. He was already aware that Scots law doesn’t require consideration for a contract to be valid.
  3. Over the last two or three years, IP Draughts and his partner in Anderson Law, Lisa Allebone PhD, have been commissioned to write template agreements and commentary for use by Irish universities and industry, in collaboration with various Irish lawyers. There seem to be fewer differences between Irish contract law and English contract law than there are between Scots contract law and English contract law. But in both cases the differences are not of major significance, at least compared with the differences between a civil law regime, such as Belgian law, and English law.

Knowing when to query the wording of a contract drafted by a lawyer in another jurisdiction, and when to live with it, when to object to a proposed contract law and when to live with it, and how to interpret a contract made under another country’s law: these are practical skills that are acquired over decades, where any knowledge gained is inevitably partial, and where there is often no absolutely right or wrong answer. Instead, these skills are part of the added value that an experienced lawyer can bring to international contract negotiations, which fall outside the domain of strict legal advice, and are not really something the client can expect their lawyer to know (or blame them for if they don’t know). Despite these limitation, the skills are nonetheless of real value, particularly for a client who wants their lawyer to be part of their commercial team.

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Telling the court how to interpret a contract

For the last two days, IP Draughts has been attending a very interesting conference, organised by the UCL Faculty of Laws and titled The Contents of Commercial Contracts: Terms Affecting Freedoms.

The conference mostly consisted of academic lawyers at UCL and elsewhere giving 15-minute summaries of papers that they had written, on topics relevant to the overall theme of the conference. After each summary, another person, often a practitioner, gave a 5-minute response, and then the subject was opened to questions and comments from the audience. In this way, 18 diverse topics were discussed, ranging from implied terms of good faith under English law, to negative covenants in loan agreements.

Two discussions particularly engaged with IP Draughts and prompted him to ask questions. The first was a paper from Richard Calnan of Norton Rose Fulbright, on the subject Controlling Contract Interpretation. He circulated a one-page set of interpretation clauses of a kind that is rarely seen, some of which instructed the court to ignore some of the general principles of interpretation that they usually apply. For example, one of his clauses stated that where party was given a discretion, he could exercise that discretion in his own unfettered interests.

IP Draughts’ question to Richard was why he had selected some of the principles of interpretation but not others. Could there not be a 20-page set of terms that more thoroughly overrode or confirmed the general principles of interpretation that the English courts apply? Richard’s slightly unsatisfactory response was that this set of terms was a ‘teaser’.

The second talk that caused IP Draughts to raise his hand was given by Professor Sarah Green of the University of Bristol, on the subject Distance and Discretion: The Implications of Smart Contracting for Freedom of Contract. IP Draughts was keen to know the panellists views on whether the (future) rise in smart contracts was likely to affect how contracts generally were interpreted. Might the courts follow the lead of smart contracts, where terms were rigidly applied, rather than find ways around the strict adherence to contract terms, using long-established principles of interpretation?

IP Draughts gave the example of a contract that provided that, on termination of the contract, one party (the principal) could require the other (the distributor) to sell him certain equipment that had been used by the distributor in the course of performing the contract, but only if notice to buy was delivered to the seller within 28 days of termination. IP Draughts had been involved in a case with similar facts to these, where it was suggested that, in practice, the court would ignore the 28 day condition. Surely this was a situation where the time limit would be strictly enforced if it formed part of a smart contract?

The speakers for this session agreed with IP Draughts’ premise that there would be a general move towards a stricter enforcement of contract terms by the courts, even where the contract was not ‘smart’.

IP Draughts is grateful to the speakers for delivering such thought-provoking material, and to Professor Paul Davies and Dr Magda Raczynska at the UCL Centre for Commercial Law for organising the conference. It seems that the organisers hope to run similar conferences in future and that they would like suggestions on topics.

IP Draughts would like to put in a plea for a conference that focuses mainly on high-tech contracts and those where IP is important. Much as he enjoyed this conference, at times he found its focus on traditional ‘City’ subjects such as insurance, shipping and banking rather remote and, dare he say it, slightly old-fashioned.

 

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