Archive for November, 2012

The title of this short post is a line from a Rudyard Kipling poem, The English Flag.

I’m reminded of it having just completed a project with Professor Jason Kilborn of John Marshall Law School comparing creditor-initiated bankruptcy in the United States, the Netherlands, and my home jurisdiction of England and Wales.  For years, I took it for granted that creditors typically use bankruptcy process as a thinly disguised mechanism for collecting debts.  This is because the practice of creditors leveraging collection by threatening to bankrupt the debtor is commonplace in England and Wales.  I just extrapolated what I knew from my little corner of the world and assumed that everyone else behaved the same way.   Not so.  When it comes to creditor-initiated bankruptcy, we English are outliers and our law and practice is entirely at odds with bankruptcy theory and with law and practice in the US.  For the full story see the paper Jason and I just finished entitled “Involuntary Bankruptcy as Debt Collection: Multi-Jurisdictional Lessons in Choosing the Right Tool for the Job” .  The abstract reads:

This paper contrasts the usage of creditor-initiated or ‘involuntary’ bankruptcy in England, the Netherlands and the United States, and it presents empirical evidence to reveal and explain stark divergences among these three otherwise very similar systems. US practice is consistent with the hypothesis that involuntary bankruptcy should represent a rare exception to the ordinary process of individual claims enforcement. Elevated levels of involuntary bankruptcy in England and the Netherlands pose a theoretical and practical conundrum. Analysis of empirical data suggests that involuntary bankruptcy is commonly used in England and the Netherlands for deleterious purposes inconsistent with the modern goals of bankruptcy. These discoveries suggest that policymakers should consider restricting involuntary bankruptcy in a variety of ways, especially against individual, natural person debtors.

In short, I’ve learned a lot about my own jurisdiction by looking at it afresh through outsider’s eyes.

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Problems of language and meaning are part of the everyday diet of law students, legal educators and legal practitioners.  In contracts, folk generally don’t care about what they meant until there’s a dispute about what they meant that has financial significance.  Once a dispute arises, the task of discerning meaning is pathological and often endowed with a strangely fictional quality.  We try to figure out “the intention of the parties” by reference to the language the parties (or their lawyers) used and the context in which they used it.  And the result is that one party wins and the other party is left saying “but that’s not what I meant!”

There are some that think that language is so inherently unstable that disputed contract terms can only safely be interpreted by reference to material outside the “four corners” of a written contract.  In the U.S., the high priest of this brand of legal postmodernism is the late Roger Traynor, former Chief Justice of the California Supreme Court.  In his classic Pacific Gas & Electric Co.opinion on the meaning of the word “indemnify,” Traynor expressed skepticism about the notion that judges can ever determine the meaning of contract terms by studying only the language of the written contract.  Judges read contracts in the light of their education and experience.  Language that has a clear, fixed meaning to a lawyer or a judge may have different meanings to others.  Traynor’s purpose was to attack judicial supporters of the “plain meaning” rule who refuse to admit extrinsic evidence of party intention where the language in the contract appears clear and unambiguous on its face.  This rule, according to Traynor, denies “the relevance of the intention of the parties or presuppose[s] a degree of verbal precision and stability our language has not attained.”  Essentially, he trades off judicial economy and efficient trial management in favour of a wide ranging inquiry into meaning and truth.

I’m inclined, however, to think that the “plain meaning” rule has had something of a bad press.  For a start, it serves a useful case management purpose.  If we presumptively admit very likely conflicting testimony of party intention (the parties are in dispute after all!), it will lengthen trials, increase costs and achieve nothing more than a further muddying of already muddy waters.  When Traynor writes that “[w]ords…do not have absolute and constant referents” I can go along with him insofar as I am happy to acknowledge that there are homonyms, i.e single words spelled and pronounced exactly the same way, that have multiple meanings.

Take the word “date”.  Am I talking about the fruit or the calendar?  Or the word “right”.  Legal right?  Right as opposed to wrong?  Right as opposed to left?  If we add a few more words, though, the meaning becomes tolerably clear.  I think most of you understand me when I say “I take my wife on a date about once a year” or “my wife is always right” (statements that are both meaningful and true).  The point is that ambiguity can often be cured by reading the troublesome words by reference to the other words in the document.  In the context of statutory interpretation, we apply the legal Latin tag noscitur a sociis (“a word is known by the company it keeps”) to this interpretive technique.

Fast forwarding to the 21st century, we now have all kinds of new languages in which to communicate and possibly even to write contracts.  As with all language systems, there are ambiguities and there are shared understandings.  Abbreviated forms of speech such as “textspeak” are a case in point.

I recently had my first encounter with the term #ftw.  According to the urban dictionary, an online work of which I am now something of a devotee, “ftw” can mean “for the win – an enthusiastic emphasis to the end of a comment, message or post; sometimes genuine, but often sarcastic” but it can also mean “f**k the world,” a wholly transparent expression of existential angst.

Armed with this new learning, I did something that you could construe as a desperate, middle-aged attempt to appear hip.  I tweeted about what I was going to be teaching in a contracts class.  Here is the tweet:

If you agree with me that it’s clear from the language as a whole that #contractsftw here denotes enthusiasm rather than sarcasm or angst then perhaps I can persuade you of my thesis that the “plain meaning” rule is serviceable as well as sensible.  Similarly, were one of you to tweet “Walters totally sucked in class again today #contractsftw” I think we can figure out from the “four corners of the tweet” which urban dictionary meaning of #ftw you intended.

Needless to say, I’m not saying anything very new or original.  Many others are dismissive of Traynor’s views on the indeterminacy of (contract) language.  For two entertaining examples see here and here.  Philosophy majors will no doubt be interested in the notion that Traynor may have misread Wittgenstein (see the comments in the first example).  So perhaps, Traynor notwithstanding, there is a consensus that the “plain meaning” rule is a useful place to start in our attempts to figure out just #wtf the parties to the contract were on about.

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