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Contractual Lunacies

posted by Mitu Gulati

My friend, Glenn West, who knows my obsession with boilerplate contract terms whose meaning the parties themselves don’t seem to know, sent me a lovely present today:  A link to an article in the ABA Journal by legal writing guru Bryan Garner on “Trying to Decipher Provisions that Literally Make No Sense”.  I realize that my sense of humor is warped, but I was laughing out loud at reading this.

Here is my favorite bit:

The lunacies [of contract drafting] involve using pastiche forms riddled with wildly inconsistent ways of expressing simple duties, absurd archaisms whose purpose few lawyers can explain, and repellent typographic practices that still today make many if not most contracts grotesque to read.

What I’d like to explore in this column is the curiosity of “busts”—the prevalence of contractual provisions, sometimes perpetuated in deal after deal, that make no literal sense at all. That they exist at all is something of a marvel. After all, you’d think that transactional lawyers would adopt a protocol of reading and rereading each contract that goes out the door. Given that critical thinking and close reading are prized habits for lawyers, contradictory or outright nonsensical provisions should be exceedingly rare. Alas, they’re not.

Most experienced lawyers can recall anecdotes of contractual monstrosities. One involves a malpractice claim against a law firm: A mortgage had somehow been prepared in the early 1980s with a crucial line dropped. The sentence made no sense. The firm had prepared dozens if not hundreds of mortgages with the same language missing, resulting in an incomplete sentence that made little sense—and the sense it did seem to make resulted in a disposition that no sane drafter could have wanted. It seems that a typist had simply skipped a line and continued typing. Nobody caught the error—until a problem erupted in the early 2000s.

By that time, the faulty contract had long since become entrenched as the “firm form.” A secretarial error from a generation before had become permanently ensconced in the form.

Last year, Bob Scott, Steve Choi and I hosted a fun conference on the phenomenon of what we called “contractual black holes”.  And one of the points on which there is always push back on is whether these actually exist. After all, in a world of highly paid lawyers and sophisticated clients, these should not exist – and especially not so in standard form documents used across thousands of transactions with billions of dollars.  Yet, we argue, they do. 

For more from the conference, see here (our paper), here  (Lisa Bernstein on “Black Hole Apparitions”), here (Chris French on Insurance Contracts), here (Mark Weidemaier & John Coyle on ”Contracts without Context”) and here (Doug Baird on “Skeumorphs”).  Rob Anderson and Jeff Manns have a piece on Black Holes/Skeumorphs/Lunacies) in M&A contracts that is almost out as well. 

Comments

If you want some irony, look at the bankruptcy court cases, including In re Parkman from Mississippi, where judges lose their minds over the possibility that debtors will be able to enforce boilerplate language in confirmation orders through nonstandard provisions.

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