Updated: Sep 24, 2019
By Ken Adams
Ken Adams here. When I first started researching contract language, the field was largely unexplored. Over the past 20 years, I’ve worked my way through countless issues relating to how to say whatever you want to say in a contract, and that part of my work is largely done. But I was pleased I was able to come up with a novel topic to explore with Vice Chancellor Travis Laster of the Delaware Chancery Court. It resulted in our article in the fall 2018 issue of the magazine Judicature entitled When Contracts Seek to Preempt Judicial Discretion. It describes how drafters try, with varying effectiveness, to control how a court interprets a contract. Go here for a PDF.
Contracts can lead to litigation. It’s standard for drafters to anticipate litigation by including in a contract rules for interpreting it. That’s why contracts usually specify a governing law. And a contract might replace default rules governing a claim for breach, for example, by reducing the period for bringing claims.
But drafters also use the following four techniques to try to control how a court interprets a contract:
stating that a judicial rule of interpretation doesn’t apply
stating an internal rule of interpretation
stating how a court is to act in a given context
stating that a particular standard applies
Each of these techniques seeks to preempt judicial discretion. The first three operate by steering a court to a desired conclusion. Imagine a rule of judicial interpretation that “up means down.” A contract could employ the first technique by saying “The up-means down rule does not apply.” It could use the second technique by saying “Up means only up.” Or it could use the third technique to say “Up is to be interpreted to mean only up.” By contrast, the fourth technique characterizes a situation as the parties see fit, whether or not that’s justified by the facts.