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A contract can often be short and simple

[Moved from the Ten Commandments of Contract Drafting post]

When I was a baby lawyer, the senior partner of my firm, the late and legendary IP litigator Tom Arnold, asked me to do a simple confidentiality agreement for a friend of his, “Bill,” who was going to be disclosing a business plan to Bill’s friend, “Jim.”

Tom told me NOT to draft a conventional contract. Instead, I was to draft just a short letter along approximately the following lines:

“Dear Jim: This confirms that I will be telling you about my plans to go into business raising tribbles so that you can evaluate whether you want to invest in the business.

“You agree that (1) you won’t disclose what I tell you about my plans to anyone else, and (2) you won’t use that information yourself, unless (A) the information has become public or (B) I say in writing that it’s OK.

“If this is agreeable, please countersign the enclosed copy of this letter and return it to me.

“I look forward to working with you.

“Sincerely, Bill.”

When I’d prepared a draft, I asked Tom, isn’t this pretty sparse?

Tom replied, yes it was sparse, but:

  • the signed letter would be a binding, enforceable contract, which Bill could take to court if he had to; and
  • Jim would almost certainly sign the letter immediately, without the delay that would result if he felt he had to have his lawyer review it.

That was an eye-opener; it taught me that contracts aren’t magic talismans; they’re just simple statements of simple things.

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