There are two ways that law courts (at least in England) have interpreted contracts: literally and purposefully. The literal approach is the more classic or traditional way of interpreting documents.
The problem with the literal approach is that it led contract writers into a number of sins:
- very detailed drafting – this was also driven by the refusal of the courts to imply terms into a contract which were not expressly stated; so if the drafter omitted something, it wasn’t part of the deal
- certainty and precision – the law didn’t like open-endedness
- what I call ‘word-soup’ to make sure everything was covered – the words written were intepreted narrowly and literally.
But such is the variety of commercial life that no-one could ever hope to foresee and provide for everything, so whatever the level of detail, cases will always arise where the contract does not provide a clear answer, and ingenuity can always find, or create, ambiguity. So over time the contract will be amended to plug the gaps that have been found in it. This can lead to the document growing like topsy and, quite often, the creation of new uncertainties.
These vices, ‘endemic in legal drafting’ – according to John Burrows in his paper for The Contract in Successful Project Management (2002) – ended up tainting the UK construction standard form contracts which “used surplus words and repetition… were not very well-ordered… contained archaisms like ‘aforesaid’ and ‘hereintobefore’… [and some] sentences were unreasonably long, sometimes more than 200 words.”
Whilst this may appear to be an academic exercise, complaining about standard form drafting, it creates very real problems for builders and their clients:
- obscurity – very few contractors or builders ever read the small print of these construction agreements
- failure to meet its purpose – as the contracts cannot meet their goal of providing for everything (an unattainable ideal)
- increasing what’s missing – the paradox is that ‘the more detailed and precise a contract is, the more gaps are likely to emerge’.
What should you do?
If you’re writing or reviewing a contract you can solve some of these issues by: ensuring your contract can be understood (comprehension) rather than needing to be complete (comprehensibility); providing processes for dealing with the unexpected (rather than trying to predict and provide for it in advance); and remembering that there is no such thing as perfection.
As John says “Contracts, which must try to achieve certainty and allocation of risk by telescoping the future into the present, can never do a perfect job.”
Source: The Contract in Successful Project Management (2002)
