The importance of being earnest…

October 25, 2012 11:51 am Published by

is something I once started to read, but failed to find it anywhere near so amusing as I’d hoped I might have done; a few scenes in, the pun in the title was still the most compelling thing about it – which, at the time, didn’t seem a good sign.

However, putting Oscar to one side for a moment (or ‘Mr Wilde’, to be less presumptuous), being straightforward and clearly saying what one means when trying to document something is important and should not be forgotten. This applies especially if trying to record something complex that will need to be referred to over time, and by (quite possibly) different people – such as, heads of terms, an option agreement or lease.

We recently received some heads of terms relating to a housing development, which referred to ‘structural planting’. When I asked for clarification as to what this was supposed to mean, there was absolutely zero consensus; the parties respectively claimed it meant ‘planting in the nature of noise barriers’, another suggested ‘estate roads’ and another claimed it was intended to cover ‘all estate services’. Needless to say, one party wanted to use as wide an interpretation as possible and the others wanted exactly the opposite – each claiming their interpretation was common sense and obvious.

Whatever the intention had once been, as no agreement could be reached, the particular provisions were removed and replaced with something everyone was happy with – but not before we had wasted time arguing about them.

The confusion probably arose because the parties hadn’t been ‘on the same page’ at the time the words were thrown down on to the page in question. It may also have been the case that one of the parties knew the phrase was nebulous but used it anyway, in the knowledge that whatever it meant, it probably meant ‘more’ than the others thought it might.

What ought to have happened, in an ideal world, is that the phrase should have been challenged as soon as it was ‘thrown into the hat’ and then pulled out again and straightened.

Whilst this may well sound like a storm in a teacup, in the context it was intended to be used, the differing interpretations of this very short phrase could have made a difference of almost £1m to the payments due on the deal.

At risk of pointing out the obvious, if someone throws a phrase at you that you don’t understand, don’t just accept it or assume the other person knows more than you do and that you’re ‘missing something’ – question it and ask them to explain.

Some phrases will turn out to be ‘terms of art’ and have an (ostensibly) obscure technical meaning that haven’t heard before and, yes, it may be a bit embarrassing when this is pointed out. Others, though, will be ‘piffle’ and need to be carefully defined to make sure they only do what is intended – some ‘throw away phrases’ can have lasting and expensive consequences!

It’s a terrible cliché and it ought to go without saying, but it really is important to be as clear as possible when committing anything to paper. If you don’t understand, ask – never be afraid of looking stupid.

The above is general comment only.  For specific advice contact :
Andrew Fleming, Company and Commercial Partner 01473 230033

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