I’m a lawyer and have programmed very simple things in very simple programming languages, and I endorse both your Contracts 101 description, which is very easy to understand and also accurate, and your parallels with computer programming. Your focus on risk allocation is spot on. I promise to do something for you, you promise to pay me, and the other 50 pages are just risk allocation and rules on how to parse the risk allocation.
Re patches on top of patches: There is some truth here. For context, there are two reasons that contracts I work on end up looking like this. The first is that the patches are carve-outs for some very particular contingency the client is worried about, and because they’re not lawyers, they don’t understand the non-patchy things that address their concern, so they want something specific addressing their concern. The other side tends to agree because they, too, know that the patchy thing is superfluous. It’s sort of like if you were a programmer who was really bad at math, and you wanted to print “hello world” if x was between 5 and 10 but it was EXTREMELY PERSONALLY IMPORTANT to you that “hello world” be printed where x=7, you would code
{if(5<x<10), PRINT “hello world”
if(x=7), PRINT “hello world”}
The second reason is cost. I could write a bespoke contract for every client’s every need, but to save time==money, there are vast form books/online repositories for standard transactions, plus we ruthlessly plagiarize from each other—it really is the highest form of flattery. The patches are added to address the specific concerns or unique details of the particular deal. We then run a sanity check applying the patches to the rest of the agreement to make sure nothing weird happens.
Finally, I would characterize a “reasonableness” requirement as “we’ll just ask a jury” rather than a “do what I mean” button. Because taking a case to trial is so flipping expensive, and putting in a reasonableness standard or “course of business” all but guarantees (due to common law) that you will have to go to trial if there’s an unresolvable dispute, and juries are super unpredictable, you would almost never use “reasonableness” as a substitute for “do what I mean.” You would keep hammering at a verbalization of “what I mean”.
If the other side were insisting on a “reasonableness” standard for some action which we could define by reference to objective facts (like “200 widgets made out of ASTM A125-96 steel”), my mental model of them would update to “so likely to be planning to cheat my client that we should walk the deal”.
The other use of “reasonable” you mention is more common—to give the party some freedom but not absolute discretion.
Thanks again for this excellent post. I feel hopeful when I see non-lawyers understanding law stuff, because it makes me feel hopeless for the future of the Rule of Law (TM) when some part of my job is so complex that no person without specialized training could hope to do it. The law should be for everyone.
I’m surprised about the jury part, for multiple reasons. I would have expected that judges handle most contract disputes without a jury (partly because I’d expect disagreements on law/interpretation more often than fact), and that the sort of parties who want to avoid trials would usually prefer to designate some other arbitrator ahead of time for most matters anyway. What am I missing here?
In most US jurisdictions, interpretation of a contract is a question of law (read: decided by the judge). However, some subparts of that inquiry are questions of fact (read: decided by the jury). By far the most common is to argue that some key term of the contract is ambiguous—that if we read the document as a whole, that key term has two mutually inconsistent meanings.
This opens the door to evidence about the parties’ intent, which is a jury question. We lawyers are nothing if not sensitive to language, so we’re very good at coming up with possible ambiguities. A judge confronted with a bona fide ambiguity, or even a borderline one, ought to let the case go to trial for the jury to resolve the intent question. (The “ought” comes from common law about when summary judgment is inappropriate.)
Another good one is in contracts for specialized goods and services with esoteric terms and requirements. You identify some inadequately defined word no jury is familiar with and hire an expert witness to opine that the word’s meaning in the particular commercial context is x. Your opponent hires an expert to say it’s y. Again, the appellate courts tell the trial courts that in this situation, a jury should resolve the “battle of the experts.” P.S. you can find an expert to say just about anything for $5,000, $10,000 on the high side.
As you can imagine, it’s much easier to litigate the interpretation of a contract than to draft one that can’t really be litigated. Transactional attorneys tend to give litigators a hard time about this, and litigators give transactional attorneys a hard time about being terrified of court rooms.
I’m a lawyer and have programmed very simple things in very simple programming languages, and I endorse both your Contracts 101 description, which is very easy to understand and also accurate, and your parallels with computer programming. Your focus on risk allocation is spot on. I promise to do something for you, you promise to pay me, and the other 50 pages are just risk allocation and rules on how to parse the risk allocation.
Re patches on top of patches: There is some truth here. For context, there are two reasons that contracts I work on end up looking like this. The first is that the patches are carve-outs for some very particular contingency the client is worried about, and because they’re not lawyers, they don’t understand the non-patchy things that address their concern, so they want something specific addressing their concern. The other side tends to agree because they, too, know that the patchy thing is superfluous. It’s sort of like if you were a programmer who was really bad at math, and you wanted to print “hello world” if x was between 5 and 10 but it was EXTREMELY PERSONALLY IMPORTANT to you that “hello world” be printed where x=7, you would code
{if(5<x<10), PRINT “hello world”
if(x=7), PRINT “hello world”}
The second reason is cost. I could write a bespoke contract for every client’s every need, but to save time==money, there are vast form books/online repositories for standard transactions, plus we ruthlessly plagiarize from each other—it really is the highest form of flattery. The patches are added to address the specific concerns or unique details of the particular deal. We then run a sanity check applying the patches to the rest of the agreement to make sure nothing weird happens.
Finally, I would characterize a “reasonableness” requirement as “we’ll just ask a jury” rather than a “do what I mean” button. Because taking a case to trial is so flipping expensive, and putting in a reasonableness standard or “course of business” all but guarantees (due to common law) that you will have to go to trial if there’s an unresolvable dispute, and juries are super unpredictable, you would almost never use “reasonableness” as a substitute for “do what I mean.” You would keep hammering at a verbalization of “what I mean”.
If the other side were insisting on a “reasonableness” standard for some action which we could define by reference to objective facts (like “200 widgets made out of ASTM A125-96 steel”), my mental model of them would update to “so likely to be planning to cheat my client that we should walk the deal”.
The other use of “reasonable” you mention is more common—to give the party some freedom but not absolute discretion.
Thanks again for this excellent post. I feel hopeful when I see non-lawyers understanding law stuff, because it makes me feel hopeless for the future of the Rule of Law (TM) when some part of my job is so complex that no person without specialized training could hope to do it. The law should be for everyone.
This was a super-helpful comment, thank you!
I’m surprised about the jury part, for multiple reasons. I would have expected that judges handle most contract disputes without a jury (partly because I’d expect disagreements on law/interpretation more often than fact), and that the sort of parties who want to avoid trials would usually prefer to designate some other arbitrator ahead of time for most matters anyway. What am I missing here?
In most US jurisdictions, interpretation of a contract is a question of law (read: decided by the judge). However, some subparts of that inquiry are questions of fact (read: decided by the jury). By far the most common is to argue that some key term of the contract is ambiguous—that if we read the document as a whole, that key term has two mutually inconsistent meanings.
This opens the door to evidence about the parties’ intent, which is a jury question. We lawyers are nothing if not sensitive to language, so we’re very good at coming up with possible ambiguities. A judge confronted with a bona fide ambiguity, or even a borderline one, ought to let the case go to trial for the jury to resolve the intent question. (The “ought” comes from common law about when summary judgment is inappropriate.)
Another good one is in contracts for specialized goods and services with esoteric terms and requirements. You identify some inadequately defined word no jury is familiar with and hire an expert witness to opine that the word’s meaning in the particular commercial context is x. Your opponent hires an expert to say it’s y. Again, the appellate courts tell the trial courts that in this situation, a jury should resolve the “battle of the experts.” P.S. you can find an expert to say just about anything for $5,000, $10,000 on the high side.
As you can imagine, it’s much easier to litigate the interpretation of a contract than to draft one that can’t really be litigated. Transactional attorneys tend to give litigators a hard time about this, and litigators give transactional attorneys a hard time about being terrified of court rooms.
Thanks, that makes more sense now.