Be Afraid of Contract Interpretation.

By Ken Adams

Ken Adams here. This post is from this 2017 LinkedIn article, but it will always be relevant. Many people make the mistake of applying to contract drafting the mindset of a litigator. Litigation is about cleaning up messes; contract drafting is about avoiding messes. It follows that contract interpretation, which is required to clean up messes, is essentially irrelevant for contract drafting.

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Recently I saw a blog post about a book called Principles of Contractual Interpretation. One of my readers sent me a link to that post; presumably they thought I might find it of interest.

In fact I glanced at it, then moved on. Not because of anything to do with the quality of the book, but because contract interpretation is largely irrelevant to what I do.

When I draft a contract, I aim to have it understood. My guidelines aim to allow drafters to understand what they're drafting, and readers to understand what they're reading. Principles of Contractual Understanding could be a clunky alternative title to A Manual of Style for Contract Drafting.

By contrast, contract interpretation is what happens when the drafter has screwed up. You interpret a contract when the meaning isn't otherwise clear.

My book cites a few hundred court opinions. It's useful for contract drafters to see how contracts can go off the rails, and to see that you can't rely on judges knowing how the English language works. And sometimes I act as a consultant in contract disputes, offering my opinion on what a reasonable reader would think something means.

But I lose interest when it comes to deciding which party should prevail. That's when things can get messy, with courts invoking flimsy judicial principles of interpretation. How flimsy? See Joe Kimble's article on the rule of the last antecedent (here), and see my article on what I call the "comma test" under the rule of the last antecedent (here). Dressing principles of interpretation up in costume jewelry and calling them "canons of construction" doesn't make them any more rigorous.

I don't want to get into fights over what a contract means. Winning such fights is a distant second best to avoiding them. If you handle transactions, hope that you're able to steer clear of contract interpretation.

Ken Adams is president of Adams Contracts Consulting LLC, author of A Manual of Style for Contract Drafting, and an advisor to LegalSifter.