On Contracts

From  Wohlt v. Wohlt, No. 4S-DR-385 (Ind. Nov. 21, 2024):

While they were married, Christi Wohlt and August Wohlt owned a company called Echo Systems, Inc., which mined, traded, and stored cryptocurrencies. When they dissolved their marriage, they agreed in their property settlement that “Husband shall retain all assets of the business, except for . . . Wife’s Mac computer and printer, iPhone, iPad and laptop,” which she would retain.

But they both forgot that Echo Systems still owned some cryptocurrencies, and the question we must answer is whether that oversight makes their agreement ambiguous as to who should own them.

As we explain below, we hold there is no ambiguity, and the parties’ agreement that August would retain “all” of the company’s assets included the company’s cryptocurrencies.

While parties sometimes agree in their property settlements to make later adjustments for forgotten assets, the parties here instead made clear that their agreement divided all their assets—forgotten and remembered—so that their division would be final.

And while a party who remembers a forgotten asset after a dissolution decree may sometimes have a remedy through claims like mutual mistake or fraud, this appeal doesn’t present those claims.

(Cleaned up, extra paragraphing added.)

I’m using this as the basis for a definition of all in the next version of my course materials (with a cite to the Wohlt opinion):

All: In case of doubt: When the term “all” is used in respect of a specified set of things, it means all such things — regardless whether the parties did not know, and/or forgot, and/or could not have known, that certain things were part of the set — other than in cases of mutual mistake or fraud when those doctrines are pleaded and proved as provided by law. [238]

And a footnote:

[238] A hypothetical example: Spouses Chris and Tracy get divorced. They jointly own a business. • In the spouses’ agreed final divorce decree, Chris becomes the sole owner of certain assets of their business, and Tracy the sole owner of “all” other assets of the business. • The spouses, though, forgot that their business also owned certain cryptocurrency assets; later Chris claims part-ownership of those assets, but does not assert mutual mistake or fraud. • On these facts, Chris loses.

As a quick example for my contract-drafting simulation course, I’ve broken up an excerpt from a recent update to Apple’s iCloud terms of service. (I reviewed the update as part of installing an upgrade to the macOS operating system.) The goal here is to Serve The Reader! by turning some Apple’s wall-of-words “spaghetti text” — borrowing a software term; hat tip: Dr. Guy Steele — into more-modular “macaroni text” that’s readily digestible by readers, not to mention easier to revise if necessary. (I’ve also tweaked some of the language to give the “client,” in this case, Apple, more operational flexibility.)

ORIGINAL:

I.  REQUIREMENTS FOR USE OF THE SERVICE

* * *

E.  Apple reserves the right at any time to modify this Agreement and to impose new or additional terms or conditions on your use of the Service, provided that Apple will give you 30 days’ advance notice of any material adverse change to the Service or applicable terms of service, unless it would not be reasonable to do so due to circumstances arising from legal, regulatory, or governmental action; to address user security, user privacy, or technical integrity concerns; to avoid service disruptions to other users; or due to a natural disaster, catastrophic event, war, or other similar occurrence outside of Apple’s reasonable control. With respect to paid iCloud services, e.g. iCloud+ as defined below, Apple will not make any material adverse change to the Service before the end of your current paid term, unless a change is reasonably necessary to address legal, regulatory, or governmental action; to address user security, user privacy, or technical integrity concerns; to avoid service disruptions to other users; or to avoid issues resulting from a natural disaster, a catastrophic event, war, or other similar occurrence outside of Apple’s reasonable control. In the event that Apple does make material adverse changes to the Service or terms of use, you will have the right to terminate this Agreement and your account, in which case Apple will provide you with a pro rata refund of any pre-payment for your then-current paid term. Apple shall not be liable to you for any modifications to the Service or terms of service made in accordance with this Section I.E.

DCT’S PARTIAL REWRITE — notice below how list items 1.5.1(1), 1.5.1(2), etc., are now worded so that they’d each “flow” correctly with the preamble of 1.5.1 even if all the other list items were deleted and the remaining list item was “merged up” into the preamble:

I.   1.  REQUIREMENTS FOR USE OF THE SERVICE [Arabic numerals are easier to cross-reference than Roman numerals]

* * *

E.   1.5.  Apple reserves the right at any time to modify this Agreement and to impose new or additional terms or conditions on your use of the Service as provided in this section 1.5. , provided that [Find and destroy just about all uses of “provided that”!!!]

1.5.1  Apple will give you 30 days’ advance notice of any material adverse change to the Service or applicable terms of service unless it would not be reasonable it would not be unreasonable to give less, or no, advance notice: [This change should make it slightly easier for Apple to justify doing something without notice.]

    (1) due to circumstances arising from legal, regulatory, or governmental action;

    (2) to address user security, user privacy, or technical integrity concerns;

    (3) to avoid service disruptions to other users; or

    (4) due to a natural disaster, catastrophic event, war, or other similar occurrence outside of Apple’s reasonable control.

1.5.2  With respect to paid iCloud services, e.g. iCloud+ as defined below, Apple will not make any material adverse change to the Service before the end of your current paid term, unless it would not be unreasonable to make the change in view of one or more of the items listed in section 1.5.1(1) through 1.5.1(4). [Let’s not repeat the list.]

a change is reasonably necessary to address legal, regulatory, or governmental action; to address user security, user privacy, or technical integrity concerns; to avoid service disruptions to other users; or to avoid issues resulting from a natural disaster, a catastrophic event, war, or other similar occurrence outside of Apple’s reasonable control.

1.5.3  In the event that Apple does make If Apple does make one or more material adverse changes to the Service or terms of use, then you will have the right to terminate this Agreement and your account. , in which case [Sunset: When is the deadline for the user to terminate here?]

1.5.4 If you do terminate your account under section 1.5.3, then Apple will provide you with a pro rata refund of any pre-payment for your then-current paid term.

1.5.5  Apple shall will [“shall” is needlessly legalese-y here] not be liable to you for any modifications to the Service or terms of service made in accordance with this Section I.E 1.5.

British lawyers sometimes use the term “for the avoidance of doubt” or “for clarity.” I’ve started sometimes using “For emphasis” instead. As an example, here’s part of a warranty provision that I’m drafting for use in the upcoming revision of my course materials:

For emphasis: The Provider (i) is not warranting or guaranteeing the future performance of any deliverable; but (ii) is committing to take the actions stated in this Clause if a deliverable fails to comply with a warranty about the state of the deliverable as delivered.

(The bold-faced emphasis is in the clause itself.)

This falls under the heading of serving the reader: Working to educate — and if necessary, persuade:

• the other party’s contract reviewers, to help get the contract to signature sooner;
• the parties’ business people who have to carry out the contract; and
• perhaps someday, a judge or jury,

all using as little of the reader’s time as possible.

Yes, brevity is laudable. But more importantly, drafters should strive to optimize the reader’s use of his- or her time, to reduce how long it takes for the reader to grasp what the parties agreed to, while also reducing the risk that a reader will form a misimpression, especially in an “edge case” (an unusual situation).

And that’s where judiciously adding a few words of explanation can help serve the reader.

Some will respond that drafters shouldn’t clutter up their contract with such so-called “throat clearing.” But brevity isn’t the paramount goal here.

Contract drafting shouldn’t be what software people call code golf: a competitive game of trying to write the shortest possible computer program (or here, contract), using the fewest words possible, the way golfers try to get around a course using as few strokes as possible.

Sure, code golf can be fun — but the resulting “work product” can be very difficult for readers to puzzle through; see the examples in the Wikipedia article linked above, which notes that: “Because golfing languages compete for extreme brevity, their design sacrifices readability, which is important for practical production environments, and therefore they are often esoteric.” (Emphasis added.)

Clients want contracts signed sooner rather than later, and they want to be able to understand them. That’s where readability beats brevity.

Moreover, many contract drafters are pretty busy: They typically don’t have a lot of time to craft precisely the minimal phrasing to cover various edge cases (tech-speak for unusual situations) using as few words as possible.

So again: Judicious explanations, for the benefit of future readers, can be a happy compromise.

See this 2016 post, which I’ve updated to reflect my current usage of “barf clause” as pithier than “wall of words.”