Corporate & Securities Law

Contract Interpretation and Contract Drafting

By Ken Adams

Oxford University Press was kind enough to send me a review copy of their new book Elements of Contract Interpretation, by Steven J. Burton, a professor at the University of Iowa College of Law. I’m now going to repay them for their generosity by observing that I’m having a hard time getting into it.

That has little to do with the book itself, which appears to be an honorable effort. (A more insightful take would require that I actually read it!) Instead, it has to do with the subject. Here’s how the book describes the role of contract interpretation:

American courts universally say that the primary goal of contract interpretation is to ascertain the parties’ intention at the time they made their contract.

In other words, contract interpretation becomes an issue only if the drafter has failed to make the parties’ intention clear.

My job is to help the drafter not fail. And I say that the drafter’s best chance of success is to use standard English to articulate the meaning of the parties.

Of what relevance is caselaw? Obviously, you want to have what you say in a contract not fall foul of caselaw. But when it comes to how you say whatever you want to say, I wouldn’t take my cue from the courts.

Poking around in the entrails of failed contract language is a messy business?court rationales vary from jurisdiction to jurisdiction and over time and are at the mercy of the semantic acuity of judges. So relying on courts to vet the building blocks of your contract language is a losing proposition. That’s why the notion of “tested” contract language is such a canard.

Of course, caselaw is a great source of cautionary tales?you see what has landed contract parties in court, and you swear to avoid similar missteps. But for purposes of the drafter, all that matters is that contract language gave rise to a dispute. What judges then made of that dispute is largely irrelevant. As a drafter, I want to avoid dispute. Being confident that I’d be on the winning side in a dispute over dubious contract language comes in a distant second.

So contract intrepretation has limited bearing on what I do.

That said, I’m sure that once I muster the discipline to read Professor Burton’s book, I’ll find stuff of interest. I’ll take it with me on my trip to Seattle next week.

Full post as published by AdamsDrafting on July 08, 2009 (boomark / email).