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When poor drafting costs us money

October 1, 2013

Jason Lemkin drew my attention to an amusing article from Business Insider, on the ‘worst typos in history’.

The article highlights the impacts that misplaced commas, hyphens or misspellings can have. It mostly draws on examples from the world of programming, but I am sure similar disasters arise from mistakes in contracting. One recent example was the famous ‘battle of the comma’ in Canada (where drafting expert Ken Adams was called as an expert witness). Another instance I recall was down to grammatical use. A US corporation offered special discounts on its products when sold to academia. The US team sent out instructions worldwide which included the words ‘25% off of the standard purchase price’. In the UK, ‘off of’ is not good English – and this was translated as meaning ‘25% of the purchase price’. An expensive error.

I recall also an instance of omission. A large corporation commissioned a supplier to undertake a major product development. Within the contract, there was a right to suspend or terminate work, which then proceeded to explain the compensation that would be made to the supplier in that event. However, the contract said ‘Customer may suspend or terminate work on written notice to the supplier. In the event of such termination, customer will etc etc’ (the agreement went on to define the compensation and how it would be calculated. You have probably spotted the problem; that is, the customer decided to terminate the program, but rather than announcing termination, it instead announced suspension – and claimed that this did not invoke the compensation clause.

What examples do you have regarding costly errors in drafting?

 

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