Treading carefully around the 'landmines'

This book examines the potentially toxic clauses that can sometimes creep into complex commercial contracts drafted in apparently standard form. These contracts include sovereign debt, mergers and acquisitions, and corporate bond documents. 

Drafted by lawyers mainly in common law jurisdictions normally under great pressure of time and resources, anomalies and quirks can arise in the documentation which are then replicated in future deals based on existing precedents. The authors describe these lurking problems as ‘landmines’ waiting to explode if the parties fall out and particularly if litigation ensues.

The problems in question can encompass what look like very standard boilerplate clauses, such as ‘manifest error’, ‘pari passu’ and ‘governing law’. The pressured legal draughtsperson will adopt these clauses without too much analysis, but they may contain subtle differences arising from previous deals, where there may have been issues specific to those transactions. An example would be a clause giving one party the right to decide what is a ‘manifest error’, rather than leaving this to be objectively determined by the courts. 

The clauses can, however, also include specific provisions which are common in a particular type of commercial contract, such as the definition of ‘external Indebtedness’ in sovereign debt contracts. The authors do not shy away from analysing such provisions. Readers who like graphs and worked examples will not be disappointed.

The types of ‘landmine’ that can arise are themselves broken down into different classes, including ‘historical holdovers’, ‘random error’ and ‘subversive accretion’. The book forensically analyses  these different classes. While rich in technical detail, the text is easy to read and anecdotal in its approach, using plenty of case studies. There is also a useful appendix.

The first part of the book examines ‘A New Paradigm’, which describes the history of these ‘landmines’ and how standard clauses have been modified sometimes in unstructured ways to create new paradigms. The second part, ‘Gurus and Novices: Building a Theory’, looks at how both senior and junior lawyers have contributed to the evidence-based explanations in respect of ‘landmines’. Part three, ‘Other Artifacts: Lawyers, Legal Culture and Landmines’, pulls together the previous sections with examples of ‘landmine’ clauses and their impact in particular cases. 

While focused on the authors’ experience of US law and practice, this well-indexed and well-structured book will also be of value to UK practitioners. 

David Glass is a consultant solicitor at Excello Law