Law Professor's Book Helps to Clear Up Poorly Written Contracts

Newswise — Poorly written contracts are more than just an inconvenience. They take up time, cost money and add to the legal system's burden.

"Legal disputes stemming from poorly written contracts are probably the most litigated issue on the civil side of the court's dockets," said Steven J. Burton, a professor of law at the University of Iowa College of Law.

To help make the process of settling those disputes quicker and less costly, Burton has written a new book, "Elements of Contract Interpretation," published by Oxford University Press. It identifies the concrete and legally provable elements that contract interpreters may use.

By doing so, the book provides a clear map of contract interpretation for attorneys, judges, arbitrators, scholars and others involved in clearing up a dispute over an ambiguous contract. Burton said it could also be helpful for those drafting a contract to make it clearer to begin with.

No studies have been done to determine how much money poorly written contracts cost the economy. But add up the legal fees accrued during negotiations, litigation and settlement, and Burton said the drain must be significant.

Some analysts believe that poorly written contracts have exacerbated the crisis now facing the banking and insurance industries. So many of the transactions involving such financial tools as Collateralized Debt Obligations and Structured Investment Vehicles went forward with contracts filled with ambiguities, inconsistencies and contradictions that lawyers are having a hard time figuring out what they mean.

Now it's up to an expensive negotiation and litigation process to determine who's responsible for what.

"Poorly written contracts are often the result of carelessness or a lack of foresight by the parties involved, or time constraints in a negotiation," said Burton, who has taught contract law and arbitration at the UI law school since 1977. Sometimes, it can't be helped, he said. For instance, negotiators may face a deadline to approve a corporate merger.

But often, future problems can be avoided with more forethought and wordsmithing when the contract is drafted.

Burton's book goes beyond being a how-to guide for practitioners, though, by providing in-depth scholarly analysis that sheds more light on the elements of contract interpretation so readers can gain a deeper understanding.

The book has been generally well received. Melvin A. Eisenberg, a professor at the University of California Berkeley School of Law, said it "provides a comprehensive, extremely lucid and significant analysis of these issues."