Imagine if you will, you are the founder and CEO of ABC, Co., a small to midsize company that’s been sued for millions of dollars in a breach of contract action. Next imagine that, just before sending the jury out to deliberate, you heard the judge say to them: “It is up to you to decide what ABC, Co.’s obligations were under the contract.” Feeling queasy? Well, here’s the kicker: your company wrote the contract.
Recently, a scenario just like this one played itself out in a Chicago courtroom. How’d it turn out, you ask? Read on.
Before I tell you how things turned out, let’s first let’s look at why they came about.
As you may suspect, plain language — or rather a lack of it — plays a role. In fact, I’ll go so far as to say that ABC just might have been able to avoid the whole mess had its contract been written in plain language. One of the many benefits plain language offers is to make it more difficult for someone else to misinterpret what you are trying to say. And in the case of a contract, what you agreed to do. Because ABC’s contract sounded more like a technical document, using obscure terms-of-art and vague industry shorthand, it left itself open to multiple interpretations. So when things didn’t go as planned, the plaintiff was able to conjure up readings of document that bore little to no resemblance to what the parties were actually thinking when they signed it.
The plaintiff in the case, a product manufacturer, hired a firm, at a cost of about $1 million, to oversee and conduct extensive product testing. That firm recommended that the plaintiff hire ABC to handle one aspect of the testing process. ABC got the job for a contract price of under $20,000. The testing went awry and the plaintiff started suing everyone in sight, including, of course, ABC.
Before trial, ABC asked the court to throw the case out, arguing that its contract with the plaintiff obligated it to perform one relatively simple task and that the evidence showed that it did so properly. The plaintiff countered that ABC undertook broad, wide-ranging responsibilities under the contract and fell down on the job. It contended that ABC essentially agreed to oversee the entire testing process and to check and double-check the work done by all the other firms involved, including the plaintiff, to ensure that all had been done correctly. The plaintiff further claimed that ABC’s failure to do its job rendered the testing invalid and cost it millions of dollars in wasted cost and lost profits. Looking at the contract, the judge found its key terms ambiguous; concluding that under the language, plaintiff’s expansive interpretation of ABC’s contractual obligations was indeed plausible. Thus, determining ABC’s obligations — under the contract it wrote — had to be left to a jury. So he denied the motion and the case proceeded to a two-week trial.
In reality, ABC never intended to take on the wide ranging responsibilities the plaintiff posited before the court. It possessed neither the expertise nor the resources necessary to perform the services outlined by the plaintiff. But the problem with the contract was that it was written using unclear and indefinite terms-of-art and esoteric industry jargon which left the parties’ intentions open to interpretation, rather than plain language that clearly expressed what the parties were thinking. So ABC found itself faced with the possibility being found liable for failing to provide services outside its capabilities and well beyond anything it contemplated when entering into the deal.
Talk about putting your company’s fate in the hands of strangers.
But ABC dodged a bullet. After about 12 hours of deliberation – that began late in the day on a Friday, took a respite over the weekend, and ended late Monday afternoon — the jury found for ABC.
Witness credibility no doubt played a pivotal role in the jury’s finding, but ABC’s saving grace may well have been that the case was tried in a federal court instead of a state forum. Had the case been tried in an Illinois court, the jury instructions would have been nothing short of mind boggling. But, as you will see, the federal judge crafted clear and concise instructions using everyday words. Plain language to the rescue.
A state court must use pattern jury instructions approved by the Illinois Supreme Court. But a federal court need not use them, even in situations, like that involving ABC, where the claim presented at trial rests on state law. If the state’s pattern instructions had been used, those on the plaintiff’s burden of proof and damages would have looked something like this:
State Instruction 1
Plaintiff claims it is entitled to recover contract damages from defendant for breach of contract. Plaintiff has the burden of proving:
- The existence of a contract between the plaintiff and the defendant.
- Performance by the plaintiff of all the obligations or a valid reason why the plaintiff did not have to perform all the obligations.
- The defendant’s failure to adequately perform its obligations under the contract.
- Resulting damage to the plaintiff.
I will explain and define these legal terms elsewhere in these instructions.
If you find from your consideration of all the evidence that one or more of these elements has not been proven, you must find in favor of the defendant. If you find from your consideration of all the evidence that each of the above elements has been proven then you must find in favor of the plaintiff, and consider the amount of damages to be awarded.
State Instruction 2
As stated in Instruction 1, as the second element of a contract claim, the plaintiff must prove is it performed all obligations required of it under the contract. To recover on its claim, the plaintiff must prove it did what the contract required it to do or had a valid excuse for not doing so, as follows:
The plaintiff claims that it performed all of its obligations under the contract.
You will address this issue in question # on your verdict.
State Instruction 3
Generally, if a party fails to perform its obligations according to the terms of the contract, the party has breached the contract. You must decide whether the defendant failed to do what it was required to do under the contract.
As stated in Instruction 1, the third element of a contract claim which the plaintiff must prove is the defendant’s breach of the contract. To recover on its claim, the plaintiff has the burden to prove the defendant failed to do something the contract required it to do. The plaintiff claims and has the burden of proving that under the contract the defendant was required to do the following:
[In the ABC case, the plaintiff 8 obligations that ABC failed to perform under the contract.]
The defendant claims it did not breach the contract.
You will address these issues in question # on your verdict.
State Instruction 4
You must decide whether the plaintiff sustained damages as a result of the defendant’s breach of the contract.
As stated in Instruction 1, the fourth element of a contract claim is damages. The plaintiff must prove it sustained damage resulting from the defendant’s breach. To recover on its claim, the plaintiff must prove that because of the defendant’s failure to perform the contract, it has not received the performance to which it is entitled under the contract.
The defendant denies the plaintiff sustained damage.
You will address the issues in question # on your verdict.
State Instruction 5
If you find in favor of the plaintiff, you must then decide how much money, if any, would fairly compensate the plaintiff for the defendant’s breach of contract.
The plaintiff has the burden of proving each element of damages claimed and that they occurred as a direct and natural result of the defendant’s breach. In calculating the plaintiff’s damages, you should determine that sum of money that will put the plaintiff in as good a position as it would have been in if both the plaintiff and the defendant had performed all of their promises under the contract.
The plaintiff seeks an award of several different categories of contract damages.
- Direct damages for:
[Here, the plaintiff claimed the monies it paid to ABC under the contract.]
“Direct Damages” are the amount of gain the plaintiff would have received if both the parties had fully performed the contract. You calculate the amount of this gain by determining the value of the contract benefits the plaintiff did not receive because of the defendant’s breach and then subtracting from that value, the amount you calculate the value of whatever expenses the plaintiff saved because of the breach.
2. Special damages for:
[Here, the plaintiff claimed approximately $4 million in losses including the amount total amount paid for the testing and various costs wholly unrelated to the testing. The plaintiff originally claimed an additional $45 million in lost profits, which the federal court ruled out of the case prior to trial.]
Special damages are different from direct damages.
The plaintiff must prove these damages were reasonably foreseeable by the parties when they entered into the contract.
- Incidental damages for:
[The plaintiff did not claim incidental damages.]
Incidental damages are different from direct and special damages. “Incidental Damages” are costs that were reasonably spent either in responding to the defendant’s breach of the contract or in securing the benefits the defendant was to have provided.
You will address these issues in questions #-#, on your verdict.
The state pattern instructions are needlessly wordy, repetitive, redundant, internally inconsistent, confusingly worded and disorganized. They require multiple readings to even approach being able to decipher them. Had they been given, I suspect that the at the deliberations’ 12-hour point, rather than returning their verdict, the jury would still have been trying to make sense of the instructions.
By contrast, the federal court gave plain language instructions. They more than adequately informed the jury of the governing legal principles, but are clear, simple and concise:
Breach of Contract Claim
Plaintiff’s claim for breach of contract is based on the written agreement referred to during the trial. Both plaintiff and defendant were parties to this contract.
To succeed on its claim of breach of contract, plaintiff must prove each of the following propositions by a preponderance of the evidence:
- There was a contract between plaintiff and defendant.
- Plaintiff performed any obligations that it had under the contract.
- Defendant failed to perform one or more of its obligations under the contract. It is up to you to decide what defendant’s obligations were, as well as whether it performed or failed to perform those obligations.
- As a result of defendant’s failure to perform one or more of its obligations under the contract, plaintiff was damaged.
If you find in favor of the plaintiff, then you must go on to decide what amount of damages, if any, the plaintiff is entitled to recover. The plaintiff is requesting compensatory damages.
The defendant denies that the plaintiff is entitled to recover compensatory damages.
If you find in favor of the plaintiff on its claim, then you must fix the amount of money that will fairly and reasonably compensate the plaintiff for any damage that it has proven by a preponderance of the evidence that it suffered as a result of the defendant’s breach of contract. This is called compensatory damages.
You are to consider the following categories of compensatory damages, and no others.
- Amounts that the plaintiff paid to defendant for the product testing.
- Amounts paid to the testing firm for the product testing.
- Other costs and expenses.
As to categories b. and c., the plaintiff must prove by a preponderance of the evidence that the damages were reasonably foreseeable by the parties at the time they entered into the contract. This does not require the plaintiff to prove that the parties expressly contemplated the particular damages at issue.
A verdict form is also part of jury instructions. The state breach of contract form would have spanned several pages and required the jury to answer a laundry list of questions about its findings. The federal court’s form looked like this:
We, the jury, unanimously find as follows on the claims of the plaintiff against the defendant:
Breach of contract claim:
(Indicate the finding by marking “X” on the appropriate line)
For Plaintiff: ______
For Defendant: ______
(to be considered only if you have found in favor of the plaintiff)
We award the plaintiff damages as follows:
Amounts paid to defendant under the contract: $ __________
Amounts paid to for the product testing: $ __________
Other costs and expenses: $ __________
TOTAL: $ __________
Just as judges appreciate, encourage – strongly – and benefit from the use of plain language in legal briefs and memoranda, the same holds for jurors when it comes to instructions. We do them a disservice and needlessly make their job harder with instructions that do more to obscure than to elucidate the law they must apply to the case. Like judges, jurors by and large want to reach a Just result. (I capitalized the “J” on purpose.) We greatly aid them in this quest when we present legal concepts, even complex ones, to them in clear, simple and readily understandable language.
A company wishing to avoid ABC’s fate should take a hard look at its contracts and other documents to make sure they clearly express what they are trying to communicate. And if it can’t avoid the fate but finds itself a litigant, it should ensure that everything submitted to the judge or jury clear, concise and impossible to misconstrue.