Contract Diamond Lanes

Some might be surprised that in the United States (and the UK, and probably other jurisdictions), you can form a legally-binding contracts by exchanging emails, as long as the following conditions are satisfied:

First, the emails must meet the standard requirements for contracts such as offer, acceptance, and consideration — this (usually) isn't an issue for everyday business agreements, especially because email attachments and any terms incorporated by reference will be considered part of that content.

Second, the emails must include "signatures" for each party — and those can (sometimes) take the form of email signature blocks,³ and even names in email "From" fields.⁴

(For numerous examples of court cases involving email contracts, see the following footnote:⁵)

Email contracts can be especially useful when "it's not a big deal" and the parties are mainly interested in having something in writing. For an example, see this blog entry about a contract that I helped a client negotiate a few years ago: By prearrangement with The Other Side's lawyer, the parties "signed" the contract by exchanging "We agree to the attached final draft" emails.

Of course, an email exchange won't create a binding contract if the content of the emails fails to meet the usual requirements of establishing a meeting of the minds on all material terms as well as an agreement to be bound.⁶

Because of the established law discussed above, your author has long included a disclaimer in email signature blocks; at this writing (early 2025), the disclaimer reads as follows:

An agreement will typically be legally binding as a contract if it meets the usual requirements, such as:

1. There must be a "meeting of the minds," generally in the form of an offer by one party that is accepted by another party.
2. "Consideration" must exist; roughly speaking, this means that the deal must have something of value in it for each party — and the "something" can be most anything of value, including for example:
   • a promise to do something in the future, or
   • a promise not to do something that the promising party has a legal right to do; this is known as "forbearance."
3. Both parties must have the legal capacity to enter into contracts — a child or an insane person likely would not have legal capacity, nor might some unincorporated associations.

Caution: In some circumstances, a showing of consideration might not be necessary, such as in a "contract under seal" under English law and in the doctrine of promissory estoppel, both of which are beyond the scope of this essay.

Note: In some jurisdictions, the mere fact that a contract is in a signed writing might be sufficient consideration. Example: In a 2024 decision, the Tennessee supreme cited a state statute stating that "[a]ll contracts in writing signed by the party to be bound, or the party's authorized agent and attorney, are prima facie evidence of a consideration," and noted that "the party claiming a lack of consideration for a validly executed contract has the burden of overcoming this presumption."¹⁵

Contracts can arise when parties send terms-and-conditions documents — a.k.a. "throwing paper" — to each other in the course of doing a transaction. This can cause problems when conflicting terms exist in the parties' respective paper.¹⁶

For example: When a corporate buyer makes a significant purchase, it's extremely common (and essentially a universal practice) for the buyer's procurement people to send the seller a purchase order. Typically, the seller's invoice will include the purchase-order number — otherwise the buyer's accounts-payable department simply will not pay the bill. These are routine internal-controls measures that are almost-uniformly implemented by buyers to help prevent fraud.

But many buyers try to use their purchase-order forms not just for fraud prevention, but to impose legal terms and conditions on the seller as well. Some buyers put a great deal of fine print on the "backs" of their purchase-order forms (physically or electronically).

Such fine-print terms often include:

• detailed — and often onerous — terms and conditions for the purchase, such as expansive warranties, remedies, and indemnity requirements; and
• language to the effect of, only our terms and conditions will apply — your terms won't count, no matter what happens.

For example, a Honeywell purchase-order form states in part — in the very first section — as follows:

Honeywell rejects any additional or inconsistent terms and conditions offered by Supplier at any time.

Any reference to Supplier’s quotation, bid, or proposal does not imply acceptance of any term, condition, or instruction contained in that document.¹⁷

The same section, incidentally, includes this … remarkable assertion:

A purchase order is deemed accepted upon a) the date the Supplier returns the acknowledgment copy of a purchase order to Honeywell or b) five calendar days from date Honeywell issues the purchase order to Supplier regardless of mechanism used to convey requirements, whichever is earlier.

(Emphasis added.) In other words: According to this language, if Honeywell sends you a purchase order out of the blue, then (saieth Honeywell) you're deemed to have accepted the purchase order in five business days. Um … good luck getting a court to go along with that assertion ….

Sellers aren't always innocent parties in this little dance, either: It's not uncommon for a seller's quotation to state that all customer orders are subject to acceptance in writing by the seller. Then, the seller's written acceptance of a customer's purchase order takes the form of an "order confirmation" that itself contains detailed terms and conditions — some of which might directly conflict with the terms in the buyer's purchase order.

Once again, Honeywell provides an example, this time when it is the supplier and not the customer: The first section of a Honeywell terms of sale document states in part as follows:

Unless and to the extent that a separate contract executed between the procuring party (“Buyer”) and Honeywell International Inc. (“Honeywell”) applies, any purchase order covering the sale of any product (“Product”) contained in this Catalog (“Order”) will be governed solely by these Conditions of Sale, whether or not this Catalog or these Conditions of Sale are referenced in the Order.

Except as provided in the “Buyer's Orders” section below, all provisions on Buyer's Order and all other documents submitted by Buyer are expressly rejected.

Honeywell will not be deemed to have waived these Conditions of Sale if it fails to object to provisions submitted by Buyer.

Buyer's silence or acceptance or use of Products is acceptance of these Conditions of Sale.¹⁸

In both cases, the "un-UNNN" language is keyed to section 2-206 of the (U.S.) Uniform Commercial Code, which states in part that for sales of goods:

(1) Unless otherwise unambiguously indicated by the language or circumstances[,]

(a) an offer to make a contract shall be construed as inviting acceptance in any manner and by any medium reasonable in the circumstances ….¹⁹

In each of these forms, the quoted language seems to state pretty clearly that acceptance is limited to the terms stated in the form.

Important: Drafters asked to prepare standard forms of this kind should strongly consider whether to include "We reject your terms!" language along these lines.

But in real-world dealings, what practical impact will parties' we reject your terms! statements have? It's not unlikely that the parties' people will pay no attention to these dueling forms; instead, what could easily happen is something like the following:

• The seller's sales people receive the purchase order and send it to the order-fullfilment department.
• The seller's order-fulfillment department ships the ordered goods — along with a confirmation of sale document and an invoice.
• The buyer's receiving department takes delivery of the ordered goods and puts them into inventor, distributes them to end users, or whatever.
• The buyer's receiving department forwards the seller's invoice to the buyer's accounts-payable department, which in due course pays the invoice.

So whose terms and conditions apply? Will it be those of the buyer, or those of the seller?

This is known as the "Battle of the Forms," of the kind contemplated by UCC § 2-207 and sometimes experienced in common-law situations as well, to which we now turn.

Where sales of goods are concerned, the (U.S.) Uniform Commercial Code has a nifty way of dealing with the Battle of the Forms in section 2-207: When the parties are merchants:

• whatever terms are common to the parties' respective contract forms is part of "the contract"
• all other terms in both parties' contract forms drop out — left on the cutting-room floor, if you will; and
• the UCC's "default" terms also apply.

Here's the text of UCC § 2-207:

(1) A definite and seasonable expression of acceptance

or a written confirmation which [sic] is sent within a reasonable time

operates as an acceptance even though it states terms additional to or different from those offered or agreed upon,

unless acceptance is expressly made conditional on assent to the additional or different terms.

(2) The additional terms are to be construed as proposals for addition to the contract.

Between merchants [see 1.8.3] such terms become part of the contract unless:

(a) the offer expressly limits acceptance to the terms of the offer;

(b) they materially alter it; or

(c) notification of objection to them has already been given or is given within a reasonable time after notice of them is received.

[DCT comment: Here comes the key part —]

(3) Conduct by both parties which recognizes the existence of a contract is sufficient to establish a contract for sale although the writings of the parties do not otherwise establish a contract.

In such case the terms of the particular contract consist of[:] [i] those terms on which the writings of the parties agree, together with [ii] any supplementary terms incorporated under any other provisions of this Act.

(Emphasis and bracketed text added.)

So suppose that:

• Buyer sends Seller a purchase order for goods; the P.O. includes terms and conditions that reject the Seller's terms;
• Seller sends Buyer an order confirmation containing its own terms and conditions, which reject the Buyer's terms;
• Seller ships the goods ordered and sends an invoice; and
• Buyer's payables department pays the invoice.

In that situation, the parties have engaged in conduct that recognizes the existence of a contract. The terms of that contract are whatever "matching" terms exist in the parties' respective forms, plus the UCC's default provisions.

Example: In 2023, the Fifth Circuit affirmed denial of a Louisiana equipment manufacturer's motion to compel arbitration of a breach of contract lawsuit that had been brought by a Canadian customer; the court summarized the relevant salvos of paper between the parties:

In sum, below were the relevant events common to these transactions:

1.  [Manufacturer] MECS sent [customer] Axiall a proposal incorporating an arbitration clause and containing express limitations on acceptance;

2.  Axiall sent MECS a Purchase Order incorporating the forum selection clause and containing express limitations on acceptance;

3.  MECS sent Axiall an Order Acknowledgment incorporating an arbitration clause and containing express limitations on acceptance (like MECS's proposal);

4. MECS shipped Axiall the demisters; and

5.  Axiall accepted the demisters from MECS.

Citing Louisiana's counterpart to UCC § 2-207, the court described the case as "a classic 'battle of the forms'" and held that the parties had not agreed to arbitration.²⁰

As discussed above, in some situations it can matter whether a party is considered a "merchant." As used in U.S. commercial law, the term merchant generally includes not only regular sellers of particular types of goods, but also buyers who regularly acquire such goods.

The Uniform Commercial Code states as follows in UCC § 2-104(1):

“Merchant” means a person [i] who[:] [A] deals in [i.e., not just sells] goods of the kind or [B] otherwise by his occupation holds himself out as having knowledge or skill peculiar to the practices or goods involved in the transaction or [ii] to whom such knowledge or skill may be attributed by his employment of an agent or broker or other intermediary who by his occupation holds himself out as having such knowledge or skill.

(Emphasis and bracketed text added.)

To like effect is UCC § 2-205, which refers to "[a]n offer by a merchant to buy or sell goods …."

Federal judge Richard Posner explained the use of the term merchant as being different than common parlance:

Although in ordinary language a manufacturer is not a merchant, “between merchants” is a term of art in the Uniform Commercial Code. It means between commercially sophisticated parties ….²¹

To similar effect is the UCC definition's commentary, apparently reproduced in Nebraska Uniform Commercial Code § 2-104.

Other cases and commentators have reached the same conclusion.²²

It's a very-different analysis of the Battle of the Forms under the UN Convention on Contracts for the International Sale of Goods. In VLM Food Trading (7th Cir. 2016), the court explained:

The Convention departs dramatically from the UCC by using the common-law "mirror image" rule (sometimes called the "last shot" rule) to resolve "battles of the forms." With respect to the battle of the forms, the determinative factor under the Convention is when the contract was formed.

The terms of the contract are those embodied in the last offer (or counteroffer) made prior to a contract being formed.

Under the mirror-image rule, as expressed in Article 19(1) of the Convention, "[a] reply to an offer which purports to be an acceptance but contains additions, limitations or other modifications is a rejection of the offer and constitutes a counter-offer."²³

The court affirmed a judgment below that, "because Illinois Trading never expressly assented to the attorney's fees provision in VLM's trailing invoices, under the Convention that term did not become a part of the parties' contracts."

(Students: This additional reading is optional.)

See generally:

–  Battle of the Forms – UCC and common-law variations

–  Purchase order (Wikipedia)

–  Brian Rogers, Battle of the Forms Explained (Using a Few Short Words) (blog entry March 1, 2012).

–  Marc S. Friedman and Eric D. Wong, TKO'ing the UCC's 'Knock-Out Rule', in the Metropolitan Corporate Counsel, Nov. 2008, at 47.

For an eye-glazing set of "battle of the forms" facts, see BouMatic LLC v. Idento Operations BV, 759 F.3d 790 (7th Cir. 2014) (vacating and remanding dismissal for lack of personal jurisdiction) (Easterbrook, J.).

An existing teaching case is Northrop Corp. (7th Cir. 1994): The buyer's purchase order stated that the seller's warranty provision was of unlimited duration, but the seller's acknowledgement form stated that the seller's warranty lasted only 90 days. The trial court held, the appellate court agreed, that both of those provisions dropped out of the contract, and therefore the buyer was left with a UCC implied warranty of "reasonable" duration.²⁴

•  Your client wants the deal signed ASAP.

•  You want to try to avoid having your draft contain hidden landmines — which you could later be blamed for if the deal were to go sideways.

•  Your draft might very well get some of the deal details wrong, or create ambiguities (we all do it) that could someday lead to costly litigation. So you want to make it easier for your supervising partner and your client to spot problems in their own review of your draft.

•  Then, your client will be impatiently waiting for The Other Side's lawyer to review your draft.

•  In litigation, the judge, the law clerk, and possibly jurors, will be reading the signed contract; you want them to quickly understand the relevant agreed terms, so that they'll be less likely to be fooled by the BS contract-interpretation arguments of The Other Side's trial counsel.

The Pasta Rule can help.

Following the steps below will help drafters to avoid long, tangled, wall-of-words provisions — which we can call "spaghetti clauses" because they read as though a L.O.A.D. had hastily poured a mess of legalese onto the page. Sidebar: Spaghetti clauses are akin to to what computer programmers disdainfully refer to as "spaghetti code," i.e., "difficult-to-maintain and unstructured source code for computer programs. Spaghetti code can be caused by several factors, such as volatile project requirements, lack of programming style rules, and software engineers with insufficient ability or experience." (Wikipedia.org.)

Each of the (short) paragraphs in a contract should address a single point that might require significant discussion. If that means spinning off some of the draft verbiage into separate paragraphs, then so be it. That way, contract clauses can be more like macaroni — or even broken-up spaghetti noodles.

Example: Here's a side-by-side comparison by Wikimedia of two versions of a well-known Creative Commons license document:

Even without reading the actual language, which version above would you prefer to review?

For more, see the horrible example at the following footnote:²⁶

I originally used the term barf clause,²⁷ but spaghetti seems to be a better visual metaphor.

A useful rule of readability, borrowed from the U.S. military,²⁸ is BLUF: Bottom Line Up Front. To illustrate, here's another unfortunately-typical example of a spaghetti clause that's in serious need of clean-up; it's from the March 2022 merger agreement by which Hewlett-Packard (HP, Inc.) acquired headset manufacturer Plantronics.

Since Where's Waldo? is no longer "a thing," let's instead try playing a short game of, Where's the Action Verb?

BEFORE:

SECTION 6.07 Indemnification and Insurance. (a) All rights to indemnification, exculpation from liabilities and advancement of expenses for acts or omissions occurring at or prior to the Effective Time now existing in favor of any individual (i) who is or prior to the Effective Time becomes, or has been at any time prior to the date of this Agreement, a present or former director or officer (including any such individual serving as a fiduciary with respect to an employee benefit plan) of the Company or (ii) in his or her capacity as a present or former director or officer of one or more of the Company Subsidiaries as of the date of this Agreement (each such individual in (i) and (ii), an “Indemnified Person”) as provided in, with respect to each such Indemnified Person, as applicable, (i) the Company Charter, (ii) the Company Bylaws, (iii) the organizational documents of any applicable Company Subsidiary in effect on the date hereof at which such Indemnified Person serves as a director or officer, as applicable, or (iv) any indemnification agreement, employment agreement or other agreement made available to Parent, containing any indemnification provisions between such Indemnified Person, on the one hand, and the Company and the Company Subsidiaries, on the other hand, [ah, here comes the action verb, finally!] shall survive the Merger in accordance with their terms and shall not be amended, repealed or otherwise modified in any manner that would adversely affect any right thereunder of any such Indemnified Person with respect to acts or omissions occurring at or prior to the Effective Time.

For an even worse example in the very next paragraph of that merger agreement, see the following footnote:²⁹

This kind of writing brings to mind a savagely-funny Dilbert cartoon about lawyers.

Let's rewrite subdivision (a) above, using the rules we've just discussed:

1.  Short paragraphs;

2.  Just one negotiation point per paragraph; and

3.  Bottom Line Up Front.

Oh, and while we're at it, let's help guide the reader's eye by (judiciously) bold-facing a few key words:.

AFTER:

Is there any doubt which version would be easier to read, understand, negotiate, and revise? Clearly, it's the After version.

And imaging the reader's task in reviewing and thinking about the Before version ….

Before: Here's a contract provision that was litigated in a state court:

If any shareholder of the corporation for any reason ceases to be duly licensed to practice medicine in the state of Alabama, accepts employment that, pursuant to law, places restrictions or limitations upon his continued rendering of professional services as a physician, or upon the death or adjudication of incompetency of a stockholder or upon the severance of a stockholder as an officer, agent, or employee of the corporation, or in the event any shareholder of the corporation, without first obtaining the written consent of all other shareholders of the corporation shall become a shareholder or an officer, director, agent or employee of another professional service corporation authorized to practice medicine in the State of Alabama, or if any shareholder makes an assignment for the benefit of creditors, or files a voluntary petition in bankruptcy or becomes the subject of an involuntary petition in bankruptcy, or attempts to sell, transfer, hypothecate, or pledge any shares of this corporation to any person or in any manner prohibited by law or by the By-Laws of the corporation or if any lien of any kind is imposed upon the shares of any shareholder and such lien is not removed within thirty days after its imposition, or upon the occurrence, with respect to a shareholder, of any other event hereafter provided for by amendment to the Certificates of Incorporation or these By-Laws, [here we finally get to the "bottom line"] then and in any such event, the shares of this [c]orporation of such shareholder shall then and thereafter have no voting rights of any kind, and shall not be entitled to any dividend or rights to purchase shares of any kind which may be declared thereafter by the corporation and shall be forthwith transferred, sold, and purchased or redeemed pursuant to the agreement of the stockholders in [e]ffect at the time of such occurrence. The initial agreement of the stockholders is attached hereto and incorporated herein by reference[;] however, said agreement may from time to time be changed or amended by the stockholders without amendment of these By-Laws. The method provided in said agreement for the valuation of the shares of a deceased, retired or bankrupt stockholder shall be in lieu of the provisions of Title 10, Chapter 4, Section 228 of the Code of Alabama of 1975.³⁰

(Emphasis added.)

AFTER: (short paragraphs and BLUF)

(Emphasis added.)

One would hope there'd be no dispute about which of these versions is more readable.

As a statutory example, this rewrite, by law professor Mark Cooney, was retweeted by legal-writing guru Bryan Garner:

Before:

A person who engages in conduct proscribed under section 530 and who in the course of engaging in that conduct, possesses a dangerous weapon or an article used or fashioned in a manner to lead any person present to reasonably believe the article is a dangerous weapon, or who represents orally or otherwise that he or she is in possession of a dangerous weapon, is guilty of a felony punishable by imprisonment for life or for any term of years. If an aggravated assault or serious injury is inflicted by any person while violating this section, the person shall be sentenced to a minimum term of imprisonment of not less than 2 years.

So what exactly is the bottom line of this statutory provision?

BLUF rewrite by Prof. Cooney:

A person is guilty of a felony if, while committing a crime under section 530, he or she:

(1) possesses a dangerous weapon;

(2) possesses an article used as a dangerous weapon; … [etc.]

(Emphasis added.)

Researchers at MIT conducted an experimental study (led by a career-changing Harvard law graduate) of legalese comprehension. The study's results pointed to a chief villain in legalese, namely "center-embedded clauses" — i.e., sentences and paragraphs where the action verb is buried in a spaghetti-clause (see 2.1) mass of verbiage. The researchers found that such clauses "inhibited recall to a greater degree than other features" such as jargon and passive voice.³¹

The U.S. Government's plain-language Web site says — correctly:

Write short paragraphs and cover one topic per paragraph.

Long paragraphs discourage users from even trying to understand your material.

Short paragraphs are easier to read and understand. …

There is nothing wrong with an occasional one-sentence paragraph.

(Emphasis added.)

Drafters should take the time to craft short paragraphs because — other things being equal:

1.  Short paragraphs are easier for The Other Side to review and, if necessary, revise during negotiation; this can speed up the negotiation process and help the parties get to signature sooner.

2.  Short paragraphs are better workaday tools for business managers — and, if necessary someday, for trial counsel and judges.

3.  Short paragraphs can be more-easily copied and pasted into a different contract without inadvertently messing up some other clause.

For readability, paragraph length matters more than contract length.

True, sometimes contracts run too long because of over-lawyering, where the drafter(s) try to cover every conceivable issue.

But focusing too obsessively on the length of a contract will obscure a more-important issue: the contract's readability.

This isn't just a question of aesthetic taste: The harder it is to read and understand a draft contract, the longer it will take (and the more it will cost) to get the deal signed.

Almost certainly, most contract negotiators would prefer to read a somewhat-longer draft, consisting of short, understandable sentences and paragraphs, than to read a shorter draft that contains lots of dense, convoluted clauses.

So: The Way to draft a contract is to write as many short sentences and paragraphs — "sound bites," if you will — as are needed to cover the subject.

And if a sentence or paragraph starts to run long: Seriously consider breaking it up.

Even if the resulting draft happens to take up a few extra pages, your client likely will thank you for it.

Back in the days of paper contracts, lawyers typically used a "compressed" format for contracts — narrow margins, long paragraphs, small print — so as to fit on fewer physical pages, because readers tended to react negatively when they saw a document with "many" pages.

Those days are gone. In an era when pretty much everyone reviews contract drafts on a screen, larger print and more white space will make it easier for the parties:

• to review and, if necessary, redline the draft — always a nice professional courtesy that might just help to earn a bit of trust; and
• to quickly discuss any points on which they disagree.³²

Why do drafters persist in creating wall-of-words clauses when the benefits of short paragraphs are so, well, plain?

An obvious candidate is the classic explanation paraphrased in English as: "If I'd had more time, I'd have shortened this letter." The paraphrase is itself a simplification of Blaise Pascal's original, translated as "The present letter is a very long one, simply because I had no leisure to make it shorter."³³

Long, dense, "spaghetti clauses" in contracts might well have come from law practice as it was before desktop computers and word-processing software. Back in the day when your author was a new lawyer:

• A lawyer would typically dictate contract language either directly to a secretary, who would take down the lawyer's words on a steno pad, often using Pitman or Gregg shorthand, or using a tape recorder.
• If the lawyer was struck by a new thought in mid-dictation, the lawyer might well say, "semicolon; provided, however, that …."
• The secretary would type up the lawyer's dictation on a manual typewriter, possibly with "flimsies" (carbon-paper sets) to make additional copies.
• Editing of typed drafts was laborious, done with typewriter erasers and/or Wite-Out or Liquid Paper correction fluid — and, when necessary, by retyping entire pages, which was costly to law firms (typists must be paid, after all).

So it's easy to see how wall-of-words contract clauses — and the occasional "provided, however" interruption — came to be regarded as acceptable, even unavoidable.

But in the modern era, there's no excuse for drafting a contract without editing it at least at least to serve the reader as described above — and preferably, to write it mainly in that way to start with.

A long paragraph of dense legalese raises the question: Was the Lazy Or Arrogant Drafter secretly hoping to use the MEGO factor ("Mine Eyes Glaze Over") to sneak an objectionable term past the reader?

This actually happens sometimes — for example, in the estimable redline.net forum (for lawyers only, membership required), a lawyer recounted how:

• One of the commenting lawyer's early clients was a writer who was looking for an agent for representation in dealing with publishers, etc.
• One agency expressed interest in representing the writer and sent over a contract for the writer to sign.
• But: Buried in a long paragraph was language to the effect that the agency would own whatever work product that the writer produced while the agency was representing the writer.

The commenting lawyer naturally advised the writer, "DO NOT SIGN."

Some lawyers might flatter themselves that by using dense legalese, they'll enhance their personal prestige as High Priests of the Profession, privvy to secret legal knowledge not revealed to ordinary mortals. That seems a dubious proposition at best — and indeed a risible one.

The author of a popular contract style manual once opined — wrongly — that, apart from the opening recitals, "in a contract you don’t reason or explain. You just state rules."³⁸ That view would be fine if it weren't for a few inconvenient facts:

1. Even in a business-to-business contract, it's people, not computers, who carry out obligations and exercise rights. Computers do exactly as they're told, but people? Not so much — at least not always reliably. (Note: So-called digital "smart contracts" are a very-different thing.)
2. People can forget (sometimes "conveniently") what was agreed to before. Worse: Memories can sometimes be "creative" when individuals' personal incentives — which often are hidden — are involved ([BROKEN LINK: personal-incentive]). And that in turn means that sometimes people have to be reminded of what the contracting parties agreed to.
3. As time goes on, people (and thus parties) can change their minds about what they regard important. "Buyer's remorse" is just one example of this phenomenon.
4. A contracting party's circumstances can change after the contract is signed. If that happens, the party might want (or desperately need) to back out of the deal.
5. The people who originally negotiated the business terms might not be in the same jobs. Their successors might not know why the parties agreed to the terms that they did. And again, the successors might have a different view of what's important and which obligations to honor.

The upshot: The people who will carry out a contract will sometimes need to be reminded — or even persuaded — to do the specific things called for by a contract. (Explanations, possibly in footnotes, see [BROKEN LINK: fns], can serve as useful reminders on that score.)

To be sure, the famous Strunck & White drafting guide counsels writers to "omit needless words." But the operative word there is needless. The contract drafter's mission includes helping remind the parties what they agreed to — and if necessary, to help persuade them to act accordingly. Sometimes, a few extra words of explanation in a contract can help.

Let's not forget another important group of future readers: Judges, jurors, and arbitrators will sometimes be asked to enforce a contract in a lawsuit or arbitration. The vast majority of contracts never see the inside of a courtroom, but drafters must think about the possibility — again, without going overboard or putting the client in the position of being scared of its own shadow.

•  Clarity is the first criterion: It's much easier for a court to grant an early motion to dismiss a bogus contract claim if the contract language itself refutes the claim. [DCT TO DO: Pick an example.] Likewise, if a contract clearly states that Party A must take Action X, and Party A doesn't do so, then a court is more likely to grant at least partial summary judgment on liability.

•  Tone can be a factor: Like all of us, judges and jurors can be influenced by what they think is "fair." Sometimes, the phrasing of a contract's terms can make a difference in how judges and jurors react to the parties and to the positions they're taking. (We'll see examples during the semester.)

For both clarity and tone, sometimes a few extra words can pay off. How much is "a few" is a matter of judgment to be addressed case-by-case — when in doubt, Ask the Partner! (3.10).

When getting a drafting assignment from a partner (or a senior associate, or some other supervisor), always ask whether there's a recent actual contract that you should use as a starting point.

• Caution: An existing contract will often reflect prior concessions that were made by one or more parties during negotiations. This means that when drafting a new contract, you should carefully review the existing contract's terms and determine whether that's really where you want to start this project.
• Caution: Lawyers even at blue-chip law firms aren't infallible, so you won't want to conclusively presume that the existing contract is of A+ quality in every detail.

Law firms often try to maintain form files. But seldom does anyone get paid or otherwise receive meaningful reward for doing that drudgery. So the quality and currency of law firm form files can be dicey.

Thousands of contract forms are available online from commercial companies that screen and curate contracts filed with the U.S. Securities and Exchange Commission EDGAR Web site. Some of these commercial sites include:

• LawInsider.com (membership required)
• OneCLE.com

Other sites such as RocketLawyer.com and LegalZoom.com offer forms, but it's hard to know what their quality is, nor whether they take into account the "edge cases" that sometimes crop up in real-world situations.

If you want to search the SEC's EDGAR Web site yourself, it helps to know that many if not most contracts will be labeled as Exhibit 10.something (and possibly EX-4.something) under the SEC's standard categorization. This means that the search terms "EX-10" (and/or "EX-4") can help narrow your search.

Example: A quick search and scan turned up the 2019 separation agreement between CBS Corporation (the TV network) and its now-former chief legal officer.

Pro tip: Online contract forms are best relied on as sources of ideas for issues to address. The clause language is not necessarily what you'd want to use in a contract for a client.

Pro tip: In some contracts you find online, the "Notices" provision might include the names and addresses of the parties' outside counsel — if counsel are in name-brand firms, that might give you increased confidence. Example: In the 2007 real-estate lease between Stanford University (landlord) and Tesla (tenant), the counsel to be notified for Stanford was a partner at Bingham McCutchen, a large Boston-based firm that closed its doors in 2014 when hundreds of its lawyers left to join the Morgan Lewis firm.

Contract forms tend to grow by accretion, as lawyers think of issues that could arise and fret about malpractice claims, and then add language to their forms.

As a result, what a commenter said about politicians (fearful of voter backlash) might apply equally to contract drafters: "[E]fforts to reform airport security are hamstrung by politicians and administrators who would prefer to inflict hassle on millions than be caught making one mistake."⁴¹ In much the same way, many contract drafters would prefer to inflict extra work on clients and counterparties, because they fear someday being criticized for having missed an issue that, in hindsight, became the subject of a dispute.

Some contract drafters try to plan for every conceivable future risk in their drafts. That can cause immediate problems for their clients — and clients can be decidedly unfond of that.

Example: The legal department of one General Electric (GE) unit found that its "comprehensive" contracts were getting in the way of closing sales deals:

When GE Aviation combined its three digital businesses into a single Digital Solutions unit, their salespeople were eager to speed up the growth they had seen in the years before the move. They found plenty of enthusiastic customers, but they struggled to close their deals. The reason: Customers often needed to review and sign contracts more than 100 pages long before they could start doing business.

The new business inherited seven different contracts from the three units. The clunky documents were loaded with legalese, redundancies, archaic words and wordy attempts to cover every imaginable legal [sic]. No wonder they languished unread for months.

"We would call, and customers would say, 'I can’t get through this,'" says Karen Thompson, Digital Solutions contracts leader at GE Aviation. “And that was before they even sent it to their legal team! … We were having trouble moving past that part to what we needed to do, which was sell our services.”

For those customers who did read the contract, negotiations would drag on and on.⁴²

In the GE Aviation story above, GE's legal department decided to do something about it. Shawn Burton, the general counsel of that GE business unit, described his team's approach in a Harvard Business Review article.

• First, the legal team met with business people — who were enthusiastic about the prospect of simplifying their contracts — to identify business risks

• Then:

Next the legal team started drawing up the contract, beginning from scratch.

No templates. No “sample” clauses. No use of or reference to the existing contracts.

We simply started typing on a blank sheet of paper, focusing only on the covered services and the risks we’d identified.

Throughout the process, we applied our litmus test: Can a high schooler understand this?⁴³

Burton provides several examples of streamlined provisions, such as the following revision:

Before:

Customer shall indemnify, defend, and hold Company harmless from any and all claims, suits, actions, liabilities, damages and costs, including reasonable attorneys’ fees and court costs, incurred by Company arising from or based upon (a) any actual or alleged infringement of any United States patents, copyright, or other intellectual property right of a third party, attributable to Customer’s use of the licensed System with other software, hardware or configuration not either provided by Company or specified in Exhibit D.3, (b) any data, information, technology, system or other Confidential Information disclosed or made available by Customer to Company under this Agreement, (c) the use, operation, maintenance, repair, safety, regulatory compliance or performance of any aircraft owned, leased, operated, or maintained by Customer of [sic; or](d) any use, by Customer or by a third party to whom Customer has provided the information, of Customer’s Flight Data, the System, or information generated by the System.

After:

If an arbitrator finds that this contract was breached and losses were suffered because of that breach, the breaching party will compensate the non-breaching party for such losses or provide the remedies specified in Section 8 if Section 8 is breached.

(Emphasis added.)

Very few contract drafters do what the GE Aviation unit did, i.e., start with a clean sheet of paper. That's because it's challenging to remember all the issues that might need to be addressed — and that makes it dangerous to throw out an existing contract form and start over unless you methodically list and address the principal business risks that the parties might encounter, just as the GE Aviation unit did — and even then, how do you know you've thought of all the possible risks?

Throwing out an existing contract, and starting over with a clean sheet of paper to draft a much-shorter contract, can be dangerous:

• The existing contract might well capture past experience with oddball issues that can cause disputes.
• The drafters of the new, shorter contract might inadvertently overlook one or more of those issues.

The language in the previous contracts presumably reflected past experience in how to handle the unusual- or oddball situations that can sometimes arise and lead to disputes. Throwing out the previous contracts might have lost that often-hard-won knowledge.

By analogy: The computer-programming world is quite familiar with this danger of losing knowledge gained from bitter experience. Users of software expect the software to work well even in oddball situations, especially those that the aviation world calls "pilot error," a.k.a. stupid human tricks (just as business clients expect contracts to accommodate unusual situations that might arise between the parties). A much-cited 2000 essay, by highly-regarded software developer and entrepreneur Joel Spolsky, argues that throwing out the source code of an existing computer program and rewriting it from scratch is a terrible idea, one that has caused major headaches for companies such as Netscape (which developed one of the first widely-used Web browsers):

The idea that new code is better than old is patently absurd. Old code has been used. It has been tested. Lots of bugs have been found, and they’ve been fixed. … Each of these bugs took weeks of real-world usage before they were found. …

When you throw away code and start from scratch, you are throwing away all that knowledge. All those collected bug fixes. Years of programming work.⁴⁴

The same could be true about contracts: If you throw out existing contract language and start from scratch, you risk losing years of accumulated knowledge of how the real world can work.

Consequently contract drafters often start with some form of prior agreement.

There's another, safer approach: Do what software developers refer to as "refactoring," namely cleaning up existing language bit by bit, as discussed in 2.1:

• breaking its long, "wall of words" provisions into smaller chunks; and
• as necessary, rewriting legalese to make it sound more like how you'd explain the concept to a judge or jury.

During the semester we'll get lots of practice at doing that.