Tag: Bad Drafting

I looked at the Stormy Daniels confidentiality agreement, the one intended to keep under wraps her fling with Trump—excuse me, her alleged fling. I figured it would have been remiss of me not to look at it. (It’s exhibit 1 to her complaint, here. If you’re not familiar with her and the saga of this confidentiality agreement, go here for one article among zillions.)

I can confidently say it’s the most flamboyantly dreadful contract I can recall seeing. Trust me, I’ve read my share of bad contracts, but bad business contracts tend to relentlessly repeat standard forms of dysfunction. By contrast, on display in the Stormy Daniels contract are myriad standard and wildly original forms of suboptimal prose and layout. It’s a dumpster fire.

The first thing that caught my eye was use of and/or in the introductory clause. That prompted the following tweets:

But because of that “and/or”, one could argue that the contract is valid if just one of EC and DD signed it. But I have never seen “and/or” used in this context. Gobsmacked.

— Ken Adams (@KonciseD) March 7, 2018

That issue might actually have a bearing on the dispute. Otherwise, my only concern was the quality of the drafting, and what I saw established that the drafter was semiliterate, transcendently careless, and not a transactional person. You’ll find below some random examples.

But before that, why did I bother looking at this contract? Well, first, everyone loves a train wreck. Second, and more seriously, I, like everyone else, have been in the peanut gallery during Trump’s reign. Here, for the first time, something related to Trump has come within my sphere of competence, and it’s sorely lacking. And third, if anyone comes away from this with a sense of what’s required for clear contract language, that would be a bonus.

Now, on to the examples:

1. Why is the first page given the page number zero?
2. Hey, let’s misspell nondisparagement in the title!
3. Why are the introductory clause and the recitals presented as if they were part of the body of the contract?
4. The recitals appear to contain obligations. That’s not what recitals are for.
5. The contract is full of idiosyncractic blather such as “This Agreement is entered into with reference to the facts and circumstances in the following recitals.” Recitals do what they do: they don’t require any fanfare.
6. Similarly pointless and idiosyncratic is “the Parties adopt the foregoing recitals as a statement of their intent.”
7. The heading 3.0 should be followed by section 3.1. Instead it’s followed by the heading 3.0.1.1. That’s like no multiple-numeration scheme I’ve ever encountered.
8. Everything under 3.0 and before 3.1 uses hanging indents. The rest of the contract uses first-line indents. WTF.
9. In section 3.0.1.1.2 (crazy enumeration!), an obligation is imposed on PP’s lawyer, although they’re not party to the contract.
10. Section 3.1 (finally!) is given the heading “Undertakings & Obligations by PP.” What’s the difference between an undertaking and an obligation?
11. One of those undertakings and obligations is “PP shall execute this Agreement.” So if PP hadn’t signed the contract, she would have been in breach of the contract! Hahahahahaha.
12. Here are the verbs used with respect to PP’s handling of the “Property”: sell, transfer, turn-over, assign, deliver, divest, convey. Hey, why not add a few more?
13. Blocks of text (a) through (g) in section 3.1 start as tabulated enumerated clauses and end as subsections. That’s messed up.
14. Tabulated enumerated clause 3.1(c) somehow acquired a solitary second-level tabulated enumerated clause, clause (1), but it’s not introduced as a tabulated enumerated clause should be. I assume it should have been given the enumeration (d).
15. Section 3.2 says “all of PP’s respective rights, title, and interest in and to the Property.” The “respective” would make sense only if this sentence applied to more than one party.
16. Section 3.3 says “PP represents and warrants … that upon such delivery to DD, PP shall not maintain ….” In other words, with respect to that language of prohibition, “represents and warrants” constitutes what I call “throat-clearing”—a redundant verb structure preceding what should be a stand-alone provision.
17. Section 4.1 uses both means and includes as definitional verbs. See A Manual of Style for Contract Drafting ¶ 6.4 for why that doesn’t make sense.
18. Section 4.2 goofily states tangible and intangible in italics.
19. Gotta love heading 4.3, “Representations & Warranties and Agreements.” Note that section 3.3 and section 4.2 contain, ahem, representations and warranties, so structure wouldn’t see a strong point of the drafter. (See this article for why represents and warrants and its variants are pointless and confusing. But that’s a nuanced discussion; we’re not in the realm of nuance with this contract.)
20. More throat-clearing in 4.3.2(a): “PP agrees and warrants and represents that PP will ….” And why switch the order to “warrants and represents”?
21. In 4.3.2(a) will is used to express an obligation; elsewhere other verb structures are used to express obligations. It goes without saying that the verb structures are chaotic throughout this contract; they don’t come close to complying with MSCD‘s categories-of-contract-language framework. For more about that, go here.
22. It looks that the heading to section 4.3.3 should have included “Tangible and/or Intangible Confidential information created by or relating to DD.”
23. Section 4.3.3 contains the defined-term parenthetical “(‘Third Party’ and/or Third Parties’)”. It’s always silly to state a defined term in both the singular and the plural when you’re defining it; furthermore, this isn’t even the way to do that. Note in passing the weird and/or and the missing opening quotation marks.
24. Section 4.3.5 says “PP separately and further warrants and represent ….” The “separately and further” is redundant. And what’s a botched subject-verb agreement among friends?
25. The drafter has an uncertain and shifting understanding of the role of punctuation in parentheticals.

OK, I’ve had enough, and I’m only halfway through. Over and out.

The recent opinion of the Delaware Chancery Court in ITG Brands, LLC v. Reynolds American, Inc., No. CV 2017-0129-AGB, 2017 WL 5903355 (Del. Ch. Nov. 30, 2017) (PDF here), stands for the proposition that making a contract a bit less clear than it could be might be all that a disgruntled contract party needs to start a stupid fight.

Here’s what the parties were fighting over:

[ITG Brands] shall use its reasonable best efforts to reach agreements with each of the Previously Settled States, by which [ITG Brands] will assume, as of the Closing, the obligations of a Settling Defendant under the PSS Agreement with each such State, with respect to the Acquired Tobacco Cigarette Brands, on the same basis as the Settling Defendants prior to the Closing.

ITG Brands argued that “prior to the Closing” modifies “shall use its reasonable best efforts”; the court disagreed.

ITG Brands’s argument is sufficiently hopeless that I can’t be bothered to consider it here. (If it’s of interest, read the opinion or this blog post by Ira Meislik.) Nevertheless, ITG Brands thought it worth waging an expensive fight over. I suspect that if the language at issue had been a bit less meandering, ITG Brands might have restrained itself. How could it have been made more concise? As I don’t have the entire contract, I’m not inclined to speculate.