The Register directs our attention to a recent case from England, Oxonica Energy Limited v. Neuftec Limited [2008] EWHC 2127 (Pat), in which a talented but testy Deputy Judge slowly removes strips of the skin of a person who drafted the contract under review. Peter Prescott, a highly respected litigator and someone with a masters degree in physics, opens his judgment with:
How do we interpret a formal commercial agreement if it is ambiguous and we have reason to believe that its draftsman did not have a deep understanding of the relevant law? I think that is what this case is about.
From the drafter's perspective, it goes downhill from there, occasionally in French ("Ce que l'on conçoit bien s'énonce clairement et les mots pour le dire arrivent aisément."), rather more often in Latin ("verba fortius accipiuntur contra proferentem" "ambiguitas contra stipulatorem andambiguitas contra venditorem") and always with that measured, assured, and learned tread that marks the best British judgments but somehow leaves you with sweaty palms and a desire to take up agriculture.
This is, I suspect, a case worth reading by those interested in the interpretation of contracts, and the judge's warnings about banging together pieces of boilerplate in a word processor are well worth heeding by everyone.
"[The document] conveys an impression that [the draftsman] was not always clear in his own mind about what he was doing and, when not clear, allowed his word processor to do his thinking for him. Bits of legal phraseology have been lifted from I know not what precedents and assembled in a strange way."
Ouch.
Umm…. Not a great endorsement for the Oxonica lawyers. I presume that they also told their client that they had a cast iron, 100% certified change of getting judgement in their favor!
The senior lawyer from a firm where I once worked described the pedigree of that firm's precedents as being "copies of examples copied from the workplaces of the original partners." Many of these documents still contained original names and various other specifics, as well as references to legislation that had since changed.
In addition to the "cut-and-paste" phenomenon described by Judge Prescott, there is also the "find-and-replace" method, which is equally problematic, in my view.
It seems that some firms would prefer to just wing it rather than allocate precious time to drafting new templates. It's cheaper and easier to just blame it on the incompetence of staff when part of someone else's completely different action or submission accidentally gets included.
From the information available on this recent case, Neuftec claim that legal costs are 1.3 million pounds. Once must assume that Oxonica have at least a similar amount of costs or even more as claimant. That is over 2.6 million due to poor drafting! I hope the lawyers who drafted this have paid the professional indemnity insurance premiums because they will be feeling slightly exposed one would expect!
Ambiguities in contracts giving rise to two reasonable interpretations,one providing and the other denying coverage,are read contra proferentem and in favor of the insured. Puckettv. U.S. FireIns. Co., 678 S.W.2d936, 938(Tex.1984). The principle of contra proferentum applies only if the contract is ambiguous. Ambiguity is a question of law for the court. Sharp v. State Farm Fire & Cas.Ins.Co.,115F.3d1258,1261 (5thCir.1997) (citing Nat’l Union, 907 S.W.2d at520). The fact that the parties disagree as to the contract’s coverage does not create an ambiguity.