Contract Psychology – why one needs skill for drafting contracts?

In the world of contract drafting, a set of universal rules and idioms govern the way in which a contract should be drawn. However, facts vary from case to case and sometimes you are faced with a dilemma. It is okay in such situations to tamper with those rules, but bending or breaking of those rules no matter how practical it is, should be done only with eyes wide open.

Essentially, lawyers are of two types: Litigators, who appear in court on behalf of clients and specialize in disputes; and Commercial/Corporate lawyers (in context of this article, let us call them Transactional Attorneys), who work towards avoiding disputes by specializing in transactional procedures and principles. Transactional attorneys focus on what is necessary to get the deal done and to ensure that the parties understand what they are saying and what they must do under a contract. A litigator is called upon in the context of a dispute and almost reflexively searches for the interpretive provisions of a contract. As transactional attorneys, we need to now and again put on our “litigator’s cap” when drafting contracts in order to develop a unique perspective on contract drafting, interpretation, and analysis.

In context of a dispute, a judge would merely focus his limited amount of time in hearing on whether the arguments regarding the interpretation of a provision in contract is commendable enough to grant or deny a judgment. Given this, the use of plain English and breaking out the key provisions into separately enumerated sub-paragraphs, rather than piecing them into a single long paragraph can quickly and undoubtedly direct a judge to the accuracy of facts and deliver the result.

 The formatting of a provision can sway the outcome of a dispute. Well, logically, the formatting of an unambiguous text in a contract between sophisticated parties represented by counsel should not matter. Whether it is in bold or in italics, in Times New Roman or in Arial, or any other format, assuming that that content is unambiguous, still the import of the provision does not differ. But as a matter of psychology, it will make all the difference in the world. Not only the judges, but it can influence the parties even before dispute arises, which is more important consequence of clean and crisp formatting of contracts.

The same reasoning can be applied backwards too. If formatting has psychological effects on the contract reader, it can be also used to put off the other party, in order to get away with some controversial fact. For example, a party can “stuff” in a one-sentence provision, substantive matter in such a way that it eviscerates the crux of the entire provision of that contract. This will be unknown to the other party, but a transactional attorney can spot the difference and remedy it accordingly.

All of this may seem troubling from an intellectual standpoint, but at the same time, an attorney with his skills of drafting contract would find it exciting and would have the capability own up the challenge equally well.