A brief news item in the Washington Post caught my eye recently. The US Supreme Court was hearing arguments in a case involving DirecTV, to decide whether the parties were bound to arbitration, as stated in the DirecTV form contract. The case involves substantive issues related to the Federal Arbitration Act, but what was interesting to me was the fact that, ultimately, the case can be traced back to a poorly written contract.
There are, in fact, scores of cases in which courts are asked to interpret ambiguous contracts, together with a substantial body of law related to contract interpretation. You’d think we’d know better by now. But I still regularly receive contracts for review that are vague, unclear, and inconsistent.
Having a lawyer review the contracts you sign as a business owner (and you sign a lot of them) may not seem like the highest legal priority. Many contracts are relatively easy to read and outwardly pose no noticeable problems. But if a business relationship goes south and the parties’ performance under a contract comes into dispute, it’s the little details – the often-ignored “boilerplate,” for example – that can make the biggest difference. Thus DirecTV ended up before the Supreme Court, arguing about its arbitration clause.
A good contract lawyer will make sure that all the provisions in a contract are clear and don’t contradict each other. They’ll know which “boilerplate” provisions aren’t in your best interest and should be negotiated out of the contract. And they can add protections for you that the other party is unlikely to offer up with their standard contract. All of which will help make your business relationships flow smoother and, hopefully, keep your company’s name off the Supreme Court docket.