I (used to) comment occasionally at Ken Adams’s blog. Recent examples: Here, here, here, here, and here. Ken and I disagree on a number of issues; some of those disagreements have been in private email exchanges. I wish I had Ken’s gift for turning a phrase, but I think some of his substantive recommendations to contract drafters could possibly hurt the drafters’ clients — including in one of his recent posts.
I say that I used to comment because Ken apparently has blocked me from further commenting on his blog. I discovered this when attempting to comment on Ken’s latest essay, which urges contract drafters: “Don’t use at its sole discretion, whatever the context.” Apparently in Ken’s view a drafter should never write (for example), Alice may in her sole discretion do X; the drafter should instead write just: Alice may do X.
Such a categorical position strikes me as very unwise in view of (for example) three state supreme court decisions, two from recent years, on a closely-related subject. So I tried posting the comment below to Ken’s essay. The comment includes case citations and commentary from the Common Draft public library of contract clauses.
When I clicked on the “Post” button, I was greeted with a red-background message informing me that Ken had blocked posts from me. I wish I’d taken a screen shot to share it here. EDIT: At a friend’s suggestion I just tried again with a different browser to get the blocked-comments message again; a screen clip is below.
Here’s the “find out more” screen clip:
Here’s the comment I tried to post:
Assuming that one cares what a reviewing court might think of particular contract language, it’d be unwise for a drafter to be so categorical in declining to use the phrase “at sole discretion.” (All categorical statements are bad, including this one.)
The “Alice may ~in her sole discretion~ do X” is lawyer repellent. It’s intended to preclude Bob’s trial counsel from later arguing that Alice, in deciding whether or not to do X, had a duty to act in good faith or to abide by standards of commercial reasonableness.
Lawyers do indeed raise this good-faith / commercial-reasonableness argument in court from time to time, sometimes successfully. Here are a few examples, copied and pasted from the assignment-consent section of the ~Common Draft~ public library of contract clauses and commentary:
• Tennessee, 2013: The Tennessee supreme court held that “where the parties have contracted to allow assignment of an agreement with the consent of the non-assigning party, and the agreement is silent regarding the anticipated standard of conduct in withholding consent, an implied covenant of good faith and fair dealing applies and requires the nonassigning party to act with good faith and in a commercially reasonable manner in deciding whether to consent to the assignment.” Dick Broadcasting Co. v. Oak Ridge FM, Inc., 395 S.W.3d 653, 656-57 (Tenn. 2013) (affirming vacation of summary judgment and remand to district court).
• Alabama 2009: The Alabama supreme court alluded to such a possibility in the Shoney’s case. The contract in suit specifically gave Shoney’s the right, in its sole discretion, to consent to any proposed assignment or sublease. The supreme court held that this express language trumped a rule that had been laid down in prior case law, namely that a refusal to consent is to be judged by a reasonableness standard under an implied covenant of good faith. “Succinctly stated, under Alabama law ‘sole discretion’ means an absolute reservation of a right. It is not mitigated by an implied covenant of good faith and fair dealing in contracts because an unqualified reservation of a right in the sole discretion of one of the parties to a contract expresses the intent of the parties to be subject to terms that are inconsistent with any such implied covenant.” Shoney’s LLC v. MAC East, LLC, 27 So.3d 1216, 1220-21 (Ala. 2009) (on certification by Eleventh Circuit).
• Oregon 1994: In the Pacific First Bank case, in a lease agreement prohibited the tenant from assigning the agreement, including by operation of law, without the landlord’s consent. The lease agreement also stated that the landlord would not unreasonably withhold its consent to an assignment of the lease to a subtenant that met certain qualifications. Notably, though, the lease agreement did not include a similar statement for other assignments. The Oregon supreme court held that ordinarily, the state’s law would have required the landlord to act in good faith in deciding whether or not to consent to an assignment. But, the court said, the parties had implicitly agreed otherwise; therefore, the landlord did not have such a duty of good faith. See Pacific First Bank v. New Morgan Park Corp., 876 P.2d 761 (Or. 1994) (affirming court of appeals decision on different grounds, and reversing trial-court declaration that bank-tenant had not materially breached lease agreement).
So: In those three jurisdictions — and very likely in others as well — a contract drafter or reviewer who followed Ken’s advice might well disadvantage her client, perhaps seriously.
* * *
Ken’s blocking of further comments from me reminded me of his prior pronouncements about the marketplace of ideas. For example:
- There’s this: “I’m all for having competing ideas duke it out, mano a mano, in the marketplace of ideas, so I urge you and others to let me know what you don’t agree with.”
- And this: “The only way to improve any body of knowledge is through the marketplace of ideas. Two commentators differ on a given issue? Have them thrash it out—may the best idea win! It does no good to tiptoe around a competing idea for fear of offending anyone.”
- And this: “We could do with a more rigorous marketplace of ideas, instead of mollycoddling our ideas because we’re too lazy or too busy to come up with alternatives, or because we have a vested interest in the conventional wisdom, or because we don’t want to risk wounding our vanity.”
On the other hand, Ken has also said this, on the subject of blocking comments: “I don’t regard my blog as a marketplace of ideas. Instead, it’s a place where, with the help of anyone who’s willing to comment, I refine my ideas until they’re ready to do battle in the marketplace of ideas. … But if discussion consists of reiterating entrenched positions, it’s no longer helpful. That’s most likely to happen with respect to those topics that I’ve analyzed at length and where I challenge the conventional wisdom.”