A Manual of Style for Contract Drafting Should be Required Reading

Imagine a world where continuous improvement is the norm. Where ideas are tested and only the best ones adopted. Where inferior practices are discarded in favor of better methods.

This is Ken Adams’s vision of the world of contract drafting.

Ken is the author of The Structure of M&A Contracts as well as numerous contract-drafting articles that have been published in prominent legal journals and magazines. He also publishes the popular blog Adams on Contract Drafting (previously published as The Koncise Drafter, which I reviewed in The Reading List). Plus, he lectures at Penn Law School, conducts seminars around the world, testifies as an expert witness, and is the founder and president of Koncision Contract Automation, which I reviewed in Koncision: One Giant Leap. Readers of this blog know that I’m a big fan.

The centerpiece of Ken’s efforts is A Manual of Style for Contract Drafting, which is published by the American Bar Association. The first edition appeared in 2004 and the third edition was released in February 2013. I was privileged to read a pre-publication manuscript of the new edition and was excited to receive a review copy in the mail shortly after the book’s release.

Finally, I’m sitting down to write a few thoughts about the book.

In-depth analysis of drafting issues

With a focus few would have the patience for, Ken seemingly has thought about contract language from every possible angle. For example, Ken separates contract language into various functional categories, such as language of performance (“the seller hereby assigns”), language of obligation (“the seller shall assign”), and language of discretion (“the seller may assign”). Deconstructing language according to its function provides a framework for choosing clear, unambiguous language that memorializes the parties’ intent. If you’re not convinced of the importance of such clarity, consider the 2011 U.S. Supreme Court case Stanford v. Roche, which turned on whether the operative language at issue effected a present assignment of valuable intellectual property or merely required a future assignment.

Another example of Ken’s deep analysis is his treatment of ambiguity. The sources of ambiguity in contracts are pervasive and difficult to spot. For example, does “the stockholders shall notify the seller” obligate each shareholder to act individually or does it require the shareholders to act collectively? Either reading is reasonable. The word “or” is particularly challenging because it can be inclusive (where the phrase “A or B” means “A or B, or both”) or exclusive (“A or B” means “A or B, but not both”). Thus, “the seller shall dissolve subsidiary A or B” could mean “the seller shall dissolve subsidiary A or B, but not both” or “the seller shall dissolve subsidiary A or B, or both.” Ken devotes about 45 pages analyzing such issues.

Ken’s analysis helps drafters understand the tools of the trade — that is, the language of contracts — and thereby helps us draft clearer contracts that are less susceptible to arguments over interpretation.

Recommended standards

As a style guide, MSCD3 sets forth standards for contract drafting. I’m not aware of any other publication that attempts to define contract-drafting standards so comprehensively.

Ken has countless recommendations ranging from using the serial comma to avoiding legalistic language, avoiding the terms “best efforts” and “hold harmless,” and dropping the recitation of consideration in the lead-in sentence. Some of Ken’s recommendations relate to critical drafting issues, while others seem more a matter of preference. But all are well-reasoned. Whether or not you decide to adopt Ken’s approach to an issue, your decision will be better informed once you’ve read Ken’s treatment of the topic.

Two of Ken’s recommendations on the lighter side that I find helpful are referring to time in a specific city (e.g., “6:00 p.m. St. Louis time”) in order to avoid mistakes involving Daylight Saving time (e.g., “6:00 p.m. CST [instead of CDT] on July 5”) and using the term “midnight” as a boundary for a point in time (e.g., “midnight at the beginning of the closing date” instead of “12:01 a.m. on the closing date”). These are simple and elegant solutions to common drafting problems and I use them in my contracts.

Prescriptive rather than descriptive

Ken’s approach is decidedly prescriptive rather than descriptive. He doesn’t merely describe contract-drafting conventions and usages — he analyzes current practices, critiques them, and recommends an approach based on whether it would lead to clear and concise contract language. While this has the benefit of releasing one from the bonds of sub-optimal conventions, it doesn’t necessarily provide comfort that a judge would look favorably upon a new approach. Lawyers draft out of fear, but adoption of some of Ken recommendations demands a rather bold fearlessness.

As an example, Ken spends a chapter talking about the term “reasonable efforts” and variants such as “best efforts” and recommends using only “reasonable efforts.” He writes, “If clients balk at using reasonable efforts, tell them that the caselaw doesn’t support the proposition that best efforts represents a more onerous standard (in the United States) or is confusing (elsewhere).” While it’s probably true that caselaw as a whole doesn’t support a distinction, that doesn’t mean that courts don’t make such a distinction in specific cases. Although wholesale adoption of Ken’s approach would have a positive long-term effect on contract-drafting practices, practitioners have to be mindful of potential results in specific instances.

Mark Anderson, a UK intellectual property attorney and the publisher of the IP Draughts blog, says this about Ken’s approach in his review of MSCD3, Improve your contract drafting. Step 1, read MSCD 3rd edn:

The perspective that Ken takes is one of making contracts clearer and more accurate in their language; one of the benefits of doing this is to reduce the opportunities for disputes over interpretation.  However, he is not directly concerned, as a practitioner should be, with “winning in court”.  It is not part of his brief to pander to the quirkiness of courts, or the encrustation of national or State case law.  He is particularly critical of how some courts go about the business of interpreting contracts.  For instance, he despairs of how the English courts make fine (and, in Ken’s view, misguided) linguistic distinctions between representations and warranties, or between best endeavours and reasonable endeavours, when these terms are used in contracts.

As practitioners, we’re more concerned about how courts actually interpret contracts rather than how they should interpret them even when the former doesn’t make sense.

Why I like MSCD3 as a practitioner

Here are some of the reasons I like MSCD3:

  • It helps me write better. As I spend time thinking about Ken’s treatment of subjects such as categories of contract language and the sources of ambiguity, I become more informed about various aspects of contract language and better able to draft clear and concise contracts.
  • Ken’s recommendations are based on research that I don’t have time to do. Contract drafting is Ken’s life’s work. But it’s merely one aspect of my work. He’s researched issues to a degree that I simply don’t have time for, and I benefit from his research as I read his reasoned recommendations.
  • It’s a tool for continuous improvement. The book is a reference manual that facilitates a virtuous cycle of continuous improvement.
  • It provides a basis for discussion. Whether or not you agree with Ken’s recommendations, Ken’s treatment of a topic is well-reasoned and contains a statement of opinion that can be tested and challenged in the sort of engagement that helps the best ideas thrive.
  • It’s an initial step in establishing contract-drafting standards. Whether you’re talking about cell-phones, html, video recording, or some other technology, standards are a prerequisite of innovation. We already have the tools for a great wave of technological innovation in contract drafting, but without established standards, adoption of the tools will continue to be held back.

Ken Adams’s A Manual of Style for Contract Drafting has greatly informed my knowledge of contract drafting and is an essential resource for me. That’s why I keep it within reach while I work, along with Tina Stark’s Negotiating and Drafting Contract Boilerplate and The Chicago Manual of Style.

In Category: Contract Drafting

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Show 7 Comments
  • Ken Adams April 29, 2013, 7:48 am

    Brian: Thank you for a thoughtful review. Of course, I can’t leave well enough alone!

    You suggest that my necessarily prescriptive recommendations could have suboptimal results in certain cases. Here’s the only way that could play out with respect to the example you cite, “best efforts”: An English drafter could decide to ignore my recommendation and use “best efforts” (or rather, “best endeavours”). But the ostensible distinction between “best endeavours” and “reasonable endeavours” doesn’t work, as a matter of idiom and a matter of logic, so if you rely on it, you’re necessarily inviting confusion. And let’s say that you end up in front of an addled English judge and win your claim that “best endeavours” requires something more than “reasonable endeavours.” In my book, that’s a distinct second best to not being embroiled in litigation.

    It’s not that I don’t care about “winning in court,” but rather that my first priority is not ending up in court in the first place. Far better to find some way of articulating your concerns without invoking an untenable distinction.

    And far from ignoring what courts say, the third edition contains dozens of citations to caselaw. Court opinions provide much guidance as to what contract language can create confusion among contract parties and in the minds of judges.

    So following MSCD’s guidelines doesn’t add risk. I’m not some sort of purist recommending clarity in the face of countervailing considerations. To the contrary: MSCD is all about avoiding risk.

    Thanks again for the review.

    Ken

  • D. C. Toedt April 29, 2013, 1:26 pm

    > It’s not that I don’t care about “winning in court,” but rather that my first priority is not ending up in court in the first place.

    Ken, do you still represent clients in contract negotiations? If so, is _their_ first priority always to avoid ending up in court? Or instead are they willing to assume that risk in some situations in pursuit of their business goals?

    For example, on the subject of “best efforts,” I can easily imagine a client, in a contract negotiation, wanting the contract to impose a best-efforts obligation on the other party. If the parties later get into a dispute, _maybe_ the dispute will be one of the tiny percentage that gets litigated to judgment. In that case, the best-efforts obligation might get scrutinized, and a court might — or might not — hold that “best efforts” means just “reasonable efforts” as Ken says.

    On the other hand, the uncertainty of the extent of a best-efforts obligation might well motivate the other party to put forth serious, honest-to-God efforts, as opposed to merely the minimum effort needed to be deemed reasonable efforts. Our hypothetical client might decide that this business upside outweighed the risk that a court could downgrade a best-efforts clause to just a reasonable-efforts clause.

    Ken, suppose that you were representing such a client who wanted the contract to state a best-efforts obligation for the other side, for the reasons outlined above. Would you go along with the client’s desires, or would you tell them to get another lawyer?

    • Rick Colosimo May 13, 2013, 8:09 pm

      I will answer that from the perspective of someone who does represent corporate clients in a wide range of contract negotiations. Using fuzzy language because of a theory that you might be able to win a lawsuit is a poor way to run a railroad.

      If I want some higher standard, the way to make that happen is to use clearer language, not fuzzier language. It’s easier to impose higher duties or standards of performance ex ante, when the parties are trying to put things together and all feeling cooperative, than down the road ex post when there’s a dispute on the table — that’s when a different, even disingenuous, interpretation will rear its ugly head.

      Since reading MCSD, I’ve found that I’m much less willing to accept vague language, whether it purports to bind the other side or my client: confusion is no one’s friend in a contract.

      • D. C. Toedt May 13, 2013, 8:37 pm

        > Using fuzzy language because of a theory that you might be able to win a lawsuit
        > is a poor way to run a railroad.

        That’s sometimes true, but by no means always. As I said in my grandparent comment, it depends on what the client’s goals are.

        1. In some situations, a client with a weaker bargaining position might well prefer to knowingly assume the business risk of fuzzy language in a contract **that actually gets signed** and lets the parties get their business done — especially if the fuzzy language relates to a contingency that in all likelihood will never arise — as opposed to crystal-clear language that causes the other side to walk away. On any number of occasions I’ve seen experienced, sophisticated business people decide to assume such risks, especially but not exclusively during my in-house years. Offhand, I can’t think of a situation in which that decision backfired.

        2. There’s a separate risk involved in trying to clarify language: You might kick a sleeping dog — that is, the other side might well wake up to the ambiguity and insist on clarifying the language in THEIR favor. See, for example, the story of Conan O’Brien’s contract with NBC. It appears CoCo’s lawyers might have done A-plus work for their client by NOT insisting that “The Tonight Show” be defined as always starting at 11:35 p.m. Eastern time. (I wrote this up in more detail last year in a post at my OnContracts.com blog, at http://goo.gl/IA9iV.)

  • Slaton Anthony May 29, 2013, 8:11 am

    I would like to write in defense of “fuzzy language.” As someone who negotiates and adminsters contracts on a daily basis, I first try to find clear and unambigious language to express the parties intent and assure there is in fact a “meeting of the minds.” However, unfortunately in our current world of commercial performance contracts the focus of contracts seems to be on risk shifting by the parties irrespective of the appropriateness of the risk shifting or the propensity of the risk to occur. In this world where the business decisions and the contractual/legal decisions have been diviorced within one of the parties, “fuzzy language” may be the only way the contracting parties may be able to reach agreed language due to the internal conflicts of one of the parties. In short, “fuzzy language” may be used as a vehicle for the parties “to agree to disagree” and reserve the particular issue for later dispute should it in fact arrise in order to keep the whole contract negotations from disintergrating due to the internal conflicts of one of the parties. Yes, this is clearly sub-opitmal drafting but neither individuals nor organizations are always capable of optimal behavior.

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