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77 Chi.-Kent L. Rev. 59 (2001-2002)
Why Contracts Are Written in Legalese

handle is hein.journals/chknt77 and id is 75 raw text is: WHY CONTRACTS ARE WRITTEN IN LEGALESE CLAIRE A. HILL* I. INTRODUCTION Drafting and negotiating complex business contracts is difficult. It requires prodigious memory capacity as well as imagination. How does the lawyer know what the contract ought to cover besides the bare promises to buy and sell or borrow and lend?' Not surprisingly, lawyers have come up with a production pro- cess by which each lawyer can access the accumulated wisdom of many: the form. The form is typically not a form in the fill-in-the- blanks sense; rather, it is an actual contract the lawyer or someone she works with has used in one or more previous transactions.2 * Associate Professor of Law, Chicago-Kent College of Law. I wish to acknowledge helpful comments by participants at the Canadian Law and Economics Association conference in 1997, the Industrial Organization Workshop at the Washington University School of Law and Department of Economics, and faculty workshops at the University of Wisconsin Law School, Chicago-Kent College of Law, and the University of Maryland Law School. I also wish to acknowledge helpful comments from Peg Brinig, Vik Khanna, Edward Lane-Reticker, Leandra Lederman, Mark Lemley, and Stewart Macaulay. 1. Indeed, acquisition and financing agreements are the mainstays of large law firm corporate practice. 2. In my experience, some law firms have aspired to, but never quite achieved, the goal of having a firm-wide form. It's not as though the forms used within a firm, or for that matter, by different firms, differ enormously in content; they do, however, look quite a bit different. The provisions might be phrased differently or be in a different order. There might be different drafting conventions as to the defined terms, always an important aspect of agreements. And there are many other matters of this sort; again, the documents do more or less the same things but cannot really be said to be the same form. There are a few industry-wide forms. The two most prominent such forms are a model indenture published by the American Bar Foundation, and the form for swap transactions. Both forms reflect regulatory and institutional conditions not generally present in the everyday world of mergers and acquisitions and financing agreements. Much of an indenture's content is dictated by statute, and/or details how nonadversarial, mechanical duties (such as issuing notes to replace lost or stolen notes) are to be performed. As to swaps, there is a fill-in-the-blanks form, developed by the International Association of Swap Dealers, a trade association. The individually negotiated terms are contained in an annex. Documentation plays a much different role in swap transactions than it does in acquisition or financing transactions: indeed, the swap documentation is often not completed until a month after the transaction has occurred. Furthermore, many, and perhaps most, terms of a swap are virtually incomprehensible to lawyers; if lawyers are to be involved at all in the transactions, which they typically are only if the swap is part of another transaction involving more legal structuring, a form, developed by finance professionals who understand swaps, is needed. Also, some lenders have fill-in-the-blanks forms for loans they will make. In my experience, these forms suffer many of the same defects as the actual contracts used as

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