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32 Constr. Law. 31 (2012)
The Shifting Sands of Contract Drafting, Interpretation, and Application

handle is hein.journals/conlaw32 and id is 75 raw text is: CONTRACT DRAFTING The Shifting Sands of Contract Drafting, Interpretation, and Application By Alex Iliff Peter Halls, and James Tedjeske In the wee hours of litiga- tion, after months have been spent haggling over contract terms that seemed perfectly clear at the outset, after tears have been shed in disputes over issues beyond dispute, after parties of sterling rep- utation have been deemed irredeemable in their oppo- nent's eyes, a person might think, Why even bother James Tedjeske drafting the contract? Next time, we'll just shake hands. Please build thisfor us. We will pay you. Certainly, say no more. It is a tempting thought, but few have the fortitude to see it through. The written contract is still the standard, and parties are ever hopeful that their next contract will have none of the holes found in all of the previous ones. The first section of this article examines the need for a contract and lays out a few of the reasons why contracts appear not to be worth drafting. It then explains the jus- tifications for a written document. The second section of the article builds from the assumption that parties will not abandon the written contract and offers advice on avoiding some of the most common pitfalls in contract drafting. Alex Iliff practices law with Dorsey & Whitney LLP Minneapolis, Minnesota. Peter Halls is a partner of Fae- gre Baker Daniels LLP, Minneapolis, Minnesota. James Tedjeske is the Vice President Legalfor Kvaerner North American Construction, Inc, Canonsburg, Pennsylvania. Why Have a Written Contract? There are many ways to understand the purpose of a written contract. Long ago, the Eighth Circuit wrote that the purpose of a written contract is to furnish a record of the terms of the agreement of the parties not easily impeached, and thereby to avoid subsequent disputes and conflicting testimony and claims regarding its terms and their meaning.' Nobody knows how many times a clearly written contract has prevented a dispute from going to court, but given how frequently contracts fail to prevent disputes, the classic understanding is only satisfactory up to a point. Some would argue that a written contract exists to set the stage, creating a framework of under- standing without drawing perfectly clear boundaries for all situations. Or, as another thinker might have said long ago, written contracts are the worst way to arrange rela- tionships between parties, except for all the other ways that have been tried. In this section, we attempt to weigh the usefulness of a written contract, beginning with the limitations and con- cluding with the advantages. Limitations of the Written Contract Chief Justice John Roberts of the US Supreme Court recently admitted that he does not read the fine print of Internet licensing agreements.2 No doubt the drafters of those agreements would like to believe their words have some effect, but if contracts are so long or complicated that no one really reads or understands them, of what use are those contracts? With so much effort put into it, how can a written contract serve no purpose? In the licensing agreement ex- ample, the problem is obvious: many people would assert it is preposterous to think a person should read and be bound by a 50-page contract governing his purchase of the download of a single song.' In construction contracts, the question of whether a written contract is of value requires closer inspection. In construction projects, the parties have reason to be heavily invested in the transac- tion, and frequently both sides are sophisticated, enriched with years of experience, and impoverished by the cost of gaining that experience. And still, many fundamental problems with written construction contracts remain. In this section we review eight of them. Conflict Between Contract Language and Practice How many times have lawyers investigating a dispute found that the processes and procedures followed on a construction project bore no resemblance to what is THE CONSTRUCTION LAWYER Spring 2012 31

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