Trend Toward “Plain English” for Contracts and Statutes

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Trend Toward “Plain English” for Contracts and Statutes.  This week, we’re looking at recent Texas and United States Supreme Court case law, and noticing a distinct trend toward a “plain English” emphasis in judicial construction of contracts and of statutes:

Mercedes-Benz USA, LLC v. Carduco, Inc., 583 S.W.3d 553 (Tex. 2019): Let’s start in Texas. In February of last year, the Texas Supreme Court held that the “integrations” clause of a sales contract (this is the entire agreement between the parties, etc.) and certain other terms  precluded any argument that a car manufacturer’s salesperson had assured a prospective dealer that it would be no problem if the dealer later wanted to relocate the dealership.  There was nothing about that in the written agreement, which was very specific about the location the dealership was to occupy. The court held that in view of the written agreement’s express terms, the dealer could not justifiably rely on the salesperson’s representations. A copy of Mercedes-Benz USA, LLC v. Carduco, Inc., appears under the following link:

https://cases.justia.com/texas/supreme-court/2019-16-0644.pdf?ts=1550848629

Takeaway: We realize that the best way to determine what business counter-parties intended is to start by reading what their contract said; and we appreciate the practicality of the claim, “well, if [they] had intended X, they could have said X.” 

But as every business trial lawyer learns, many (most?) contract disputes don’t arise over things the parties consciously thought about.  Instead, disputes arise because things come up later – out of the blue – which never crossed the parties’ minds when they were negotiating the contract. With respect to the point now sharply at issue, the parties didn’t “intend” anything; they simply never thought about it. They were focused on what they were trying to accomplish, and if they really expected problems to arise which they couldn’t work through later, they wouldn’t have agreed to do the deal in the first place. 

No matter, at least for now and in Texas: you had better write what you want (and expect) in your contract.  That means thinking through everything you’re assuming, expecting, or (especially) counting on, and making sure that it is expressly stated in the written agreement.

Romag Fasteners, Inc. v. Fossil Group, Inc., No. 18–1233 (S.Ct. April 23, 2020): Now, let’s turn to the United States Supreme Court, where something very similar arose at the highest federal level this week, though it involved a matter of statutory rather than contract interpretation.  Just two days ago, on April 23rd, the Supreme Court resolved a long-standing circuit conflict by holding that the Lanham Act does not require a finding of “willfulness” as a precondition for an award of profits in trademark infringement, simply because the Lanham Act does not say that willfulness is required.  A link to Romag Fasteners, Inc. v. Fossil Group, Inc.  is below:

 https://www.supremecourt.gov/opinions/19pdf/18-1233_5he6.pdf

Takeaway: The Lanham Act may be unusual in that it does say willfulness is required in monetary claims for trademark dilution under Section 43(c), while omitting to say so for trademark infringement under Section 43(a).  Still, the Supreme Court’s focus on what is not said in the text of the statute – despite years of conflicted decisions – is striking. 

Connecting the dots of these two cases and pointing toward a trend, the challenge for lawyers isn’t much different now than it’s always been: how to identify the most important “if’s” and get them written into the agreement, without souring or over-complicating the deal in the process. 

The difference now is that what’s not said in agreements (or statutes) is increasingly as important as what is.

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 Hosch & Morris, PLLC is a Dallas-based boutique law firm dedicated to data protection, privacy, the Internet and technology. Open the Future℠.