Friday, December 14, 2007
Here is Chancellor Chandler's order on the testimony and report of Prof. Coates (just released by Delaware). Chandler states:
After thoroughly reviewing Professor Coates’s report and both parties’ briefs, I find that the portion of the report that describes buyout deal structures is admissible as factual testimony and that the remainder of the report that purports to explain drafting practices is inadmissible as impermissible legal opinion.
I think this is the right decision, but I find more interesting his statement in footnote 7:
Remarkably, in his report, Professor Coates appears to excuse practices that can only be described as inartful drafting as “one of the ways that the parties [to buyout negotiations] commonly economize on time and costs.” Id. Professor Coates states that the parties, in contravention of basic principles of contract interpretation and drafting, use certain phrases (e.g., “subject to” or “notwithstanding”) so as to “avoid the need to attempt to synthesize every provision of every related agreement that is or may be partly or wholly in conflict with the provision in question.” Id. Not surprisingly, disputes often arise precisely because of provisions that are “partly or wholly in conflict” with each other.
I respectfully agree with Chancellor Chandler as I stated last week. And for those who want it may also give some insight into how he is reading the merger agreement. I would also expect URI to seize on this footnote to support their case -- the poor drafting job here does not excuse what should be the plain reading of the contract, and contracts should be interpreted against the drafter. Ultimately, the sloppy drafting in the URI merger agreement is a lesson for all M&A lawyers about how to approach and train drafting. But that is a subject for another post.