Drafting Contracts

19 January

• Exam is last class day. There are 11-12 assignments. .DOC format.
• Handout #1: syllabus. Don't trust after week 5-- this may shift.
• Nearly always done by 5:00PM.
• Grading is based on the drafting considerations for the type of document, but also grammar, spelling, etc.
• We're going to focus on negotiated contracts, not form documents. Even though a majority of the pages might be boilerplate language in negotiated contracts, we're going to focus on the individual provisions specific to the business deal. This is a lot like real life: you start with a model, but it doesn't reflect the operative provisions of the transaction. The art here is putting the parties' actual agreement into the contract.
• This generally involves a lot of phone calls and meetings to find out the client's wishes. Typically the client has a deal in mind, but hasn't thought out the various "what if" scenarios that might unfold. We want those questions answered in the contract, so that there's no litigation when they arise.
• There's generally not too much research here-- it's more about negotiating provisions, and getting them down in language everyone understands. Orchestrating the deal and keeping it moving towards closing.
• Mostly we're talking about creating relatively long-term relationships. We don't go to all this trouble for one-shot short-term stuff: we're writing terms that the parties will have to observe for some period of time.
• The process of forming the contract is good because it forces the parties to understand what they have to give up in order to get what they want out of the deal-- it gives them more realistic expectations.
• This is sort of like drafting legislation, except it's only binding on the parties.
• Most legal writing is expository: explaining or persuading. A contract is different-- the goal here is to describe with precision what the parties have agreed to, in language that has to be interpreted the same way by anyone who reads it.

  So not only to you have to find out for sure what the parties want to agree to (including the relevant issues below the surface), but you also have to write it in bulletproof form.

  This is why lawyers get called deal-killers: they sometimes wind up forcing clients to realize that they can't do what they want.

• Anyway, ambiguity is the contract lawyer's enemy. Any term that can be interpreted in more than one way can foster a dispute, and eventually litigation.

  Poorly drafted contracts are a dime a dozen: the caselaw is littered with them.

• Conventions for key words in provisions. We will use the following:
  • Shall: we say this when we want to create an obligation for one of the parties (not "will" or "must").
  • Shall not: when we want to prohibit something (not "won't" or "can't").
  • May: indicates that a party has discretion to do something (not "can").
  Those are pretty much the standard accepted usages in modern contract drafting, so this will serve us just fine.
• Handout 2: Assignment number 1. A botched contract for home construction.

  This is apparently trying to create a "cost plus" agreement. It's bad: grammar and punctuation aren't helpful.

  Some tips:

  1. Create a few defined terms (especially if they're concepts that will come up over and over again). So maybe something like "Construction Costs." This can be done either at the beginning of the document, or in the provision where they are used for the first time. Article I of a complex contract is often definitions of terms. In a short document, you might not want to force people to flip back to the definition section. See § 2.6 in the text. Try not to make the definitions too artificial-- you don't want to confuse the people who will have to use the agreement. Also, don't worry that a term like "payroll" might be ambiguous in this assignment-- you can assume they're defined elsewhere so you don't have to do all kinds of research about how to give a comprehensive definition.
  2. Don't be afraid to use examples (particularly when math is involved) to show how a provision is intended to operate under circumstances likely to create questions.
  3. Do not number lines like the example does.
• We're not going to get uptight about archaic legalese; we can use it as long as it's not ambiguous.