Purpose: Difference between revisions

How easy it is to ''make'' or ''sell'' a guitar bears no necessary relation to how easy it is to ''play'' or ''fix''. But note: the interests and aspirations of those who interact with the guitar during its production and use are very different. [[Leo Fender]]’s real genius was how fabulously his design managed all these interests, so the same thing delivers for ''all'' its users: It’s easy to machine, easy to build, easy to set up, easy to fix, easy to play, it looks great, gets the girls ''and'' kills fascists.  

Hypothesis, therefore: great [[design]] works for all phases, and all users, of an artefact throughout its production and use. Nor is there a strict hierarchy of priorities between these users: you might say “it is more important to be easy to play than to build” — but if difficulty of building doubles its production cost — or makes ''fixing'' it more difficult — there will be fewer users. These competing uses exist in some kind of ecosystem in which the artefact will thrive or perish.

Ok that is a long and fiddly [[metaphor]]. Let us now — sigh — tear ourselves away from Leo Fender’s wonderful creation, and apply the metaphor to the process of preparing, executing and performing a commercial contract.   

Who are the interested constituencies when it comes to the production and use of contracts? It is not just Party A and Party B: it isn’t ''even'' Party A and Party B, if we take the [[Jolly Contrarian|JC]]’s [[Agency problem|cynical line]] that each is merely a husk: a host — a static entry in a commercial register somewhere — unless and until animated its ''[[agent]]s''.  

The constituents who have an interest in a contract being done are those in Sales, Legal, Credit,  Docs, Operations, Risk, and Trading — on each side of the table — and their external advisors. We see their interests: what they want out of the contract itself, are wildly different:

To [[Sales]], a contract should be a tool for ''[[persuasion]]'': it should induce the customer to think happy thoughts about her principal — okay, fat chance with a legal contract, but a gal can dream — but at the very least it should be no less intimidating a document than is being presented by her competitors to the same client. Sales will be specially tuned to the message that [[all our other counterparties have agreed this]] should legal or credit baulk at a client request, and will hammer this imperative home, as often as not prevailing.  

To [[Credit]], a contract is a long-range defensive strategy. The name of the game is to encode as many snares, booby-traps, tripwires and hundred-ton weights into the document as could possibly come in handy in a time of apocalypse. It will not matter that 75% of those contingencies will not, in the life of our universe, come about,<ref>For the obstreperous universe has a habit of playing tricks with people who are meant to know better. This is known as [[Goldman|David Viniar]]’s, or [[Long-Term Capital Management]]’s folly.</ref> nor that the firm would not, in the life of that same universe, dream of actually using these tools: the exercise is fully hypothetical. The [[credit]] team’s perspicacity is measured not in ''prospect'', about what in a sensible universe ''might'' happen, but in ''hindsight'' about what, in the mad universe we do inhabit, ''did'' happen. Since, at the inception of a relationship all of this is entirely unpredictable, a [[credit officer]] has no choice but to select all ordinance available to her.  

''Theirs'': The opposing side’s lawyers main goal is to show how their clients how clever and useful they are. This they do by ''hotly insisting you change minor terms in your contract''. Thus, [[Otto Büchstein|Büchstein]]’s articulation of the founding principle of commercial legal advice: [[Scribo, ergo sum|''scribo, ergo sum'']].<ref>[[I mark up, therefore I am|I mark-up, therefore I am]]</ref> Now, the more rigorously you benchmark your terms to the market, the less scope there will for show-boating [[mark-up]]: to be sure, one can never entirely rid a document of fussy clarifications and [[For the avoidance of doubt|“doubt”-avoiding]] parentheticals, but one can ''minimise'' them by careful document design.  

Now, if the opposing camps start out five miles from each other, neither side can know when, whether or on what terms minds will meet — or if they even ''will'' meet. Experience will say there is a fair chance, but exactly ''where'' will differ every time and, by the time their consensual landing place becomes clear, it will be so rubble-strewn, shelled, pock-marked and shot up that it will more closely resemble the ruins of Dresden than an agreement between amicable merchants seeking each others’ mutual benefit.

The purpose of a contract for the legal counsel: A ''livelihood'': a thing in and of itself. Somewhat a like a stag weekend doing paintball.