I recently received an email that the professor of my first-year law school contracts class, Whitmore Gray, had died. Whit Gray was not the most renowned or beloved of my law school professors. But, he said offhandedly one of the most important things that any of my law school professors ever said: Don’t draft or sign a contract unless you know what all of the words mean.
When Professor Gray made his statement, I thought it was kind of gratuitous — no lawyer ever drafts a contract without knowing what the words mean and people don’t sign contracts unless they know what the words mean. Oh how naïve I was.
What I have learned since that day many decades ago is that lawyers and laypeople regularly cut and paste boilerplate language when they are making contracts. When disputes arise, the courts look not to what the parties intended a contract to mean, but what it objectively means pursuant to various doctrines such as the “plain meaning” rule or the “four corners of the contract” rule. Often the courts consult dictionaries to ascertain the meaning of words within a contract.
However, words have different meanings in different contexts. For example, the Uniform Commercial Code allows a written contract to be explained or supplemented by “course of performance, course of dealing, or usage of trade.” See UCC 2-202 (codified in Maryland as Md. Code, Commercial Law, § 2-202). How a word is used in a particular trade may differ from how it is used commonly.
Not only do words have special meanings in particular trades, the courts also put special significance on certain words. For example, I was involved in a series of cases dealing with anti-assignment provisions in personal injury structured settlement contracts. The insurers that drafted the contracts intended that the structured settlements (i.e., settlement payments to be made over time as opposed to being paid in one lump sum) not be assignable, in order to comply with certain provisions of the Internal Revenue Code. However, anti-assignment provisions are disfavored by the courts and most courts will only enforce them if the provision states that the party to the contract does not have the “power” to assign. See, e.g., Liberty Life Assurance Company of Boston v. Stone Street Capital, 93 F. Supp. 2d 630 (D. Md. 2000).
If you don’t know what all the words of a contract mean, it is better to find out before you sign. The cost of a lawyer’s time to review the contract and ask a few questions on your behalf can be far less than the cost of a future dispute over contractual terms.
If you are thinking of signing a contract that you do not entirely understand or you need a contract written, Astrachan Gunst Thomas, P.C. can help. Contact Donna Thomas at 410-783-3522 (firstname.lastname@example.org) or Kaitlin Corey at 410-783-3526 (email@example.com).