The Top Nine List

Bob Roth at Gonzo Banker had an amusing, yet informative, post last Friday. Bob listed his all time favorite outrageous provisions that vendors stick in their contracts with banks. He declined to follow David Letterman and listed only his top nine. Since a part of what I do in my everyday practice is to review and advise banks on such agreements, I'm attuned to this subject. On the other hand, inasmuch as I've been reviewing such agreements for over 36 years, I think I've become less susceptible to "outrage" than is Bob. I'd describe the feeling I get when I receive a contract with one or more of these one-sided, unreasonable provisions in it as a "here-we-go-again" sense of ennui, accompanied by an Elvis-like lip curl and a strong desire to immediately consume a six-pack of Shiner with a Jack Daniels Black chaser (otherwise known in this part of the world as "The Breakfast of Champions"). The only item on the list I'd quibble with Bob about is the first. I don't object to a contract provision by which both parties agree that they've been represented by counsel, that the terms were negotiated at arms length, and that none of the terms will be construed against one party as the drafter of the contract. First of all, the bank better have it reviewed by an attorney, and not the CFO's pet parakeet, and the attorney who's reviewing it ought not to be the Vice-Chairman's brother-in-law, Cleevus, who's specialty is traffic tickets (not that there's anything wrong with that). If anything is ambiguous in the contract and in need of a judge to sort out its meaning (who might apply the rule of judicial interpretation that an ambiguity is generally construed against the drafter), then the bank didn't do a thorough enough review of the agreement in the first place. If it had, it would have clarified the ambiguities. It's not the sort of contract provision that makes my blood boil, that I think needs to be stricken (although it may need to be "tweaked"), or that is likely to cause any bank client to suffer heartburn. That minor point made (and after all, I'm a lawyer, so I not only focus on the unessential, I can't control the compulsion to talk about it), Bob nails the rest. He also has an excellent bullet point list of advice that every banker would be well advised to read and to follow.

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