CONTRACTS OF THE DEAD AND BOILERPLATE.

Author:Drennan, William A.
 
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ABSTRACT

Black's Law Dictionary defined "boilerplate" as language with "a definite meaning in the same context without variation.'" If the goal of using boilerplate is uniform application, (2) it fails spectacularly in the murky land of contracts of the dead. Some courts have treated boilerplate clauses as reflecting the intent of the parties and decided whether contractual obligations survived the death of a party based on the boilerplate. Other courts have ignored or otherwise dismissed the exact same boilerplate. This Article argues that the latter approach is usually preferable. Death talk is a social taboo, so parties rarely address it directly in written contracts. When they employ standard boilerplate clauses, it seems doubtful that they intend it to address death before performance of the contract.

CONTENTS INTRODUCTION I. INEVITABLE DISPUTES, JUDICIAL PRESUMPTIONS, AND THE PRIMACY OF INTENT II. FINDING A CLEAR EXPRESSION OF INTENT IN THE CONTRACT III. ASCRIBED-INTENT APPROACH IV. REPORTED CASES INTERPRETING BOILERPLATE AT DEATH A. Cases Interpreting Boilerplate About Successors and Assigns B. Cases Interpreting Boilerplate About Binding Legal Representatives, Heirs, or Executors V. OPTIONS AVAILABLE WHEN INTERPRETING BOILERPLATE AT DEATH A. Plain or Prevailing Meaning of Some Boilerplate Terms B. Questioning the Policies Behind the General Rule of Contract Survival C. Doctrines for Avoiding Economic Senselessness CONCLUSION "[I]t may be doubtful if the parties [to this contract] ever put their minds to the question of 'suppose [you] die.'" (3)

INTRODUCTION

An ad man's contract said it was binding on his successors and his assigns. (4) But upon his death, a court said his estate could not perform the balance of the advertising contract either as a successor or as an assign, (5) and the surviving party did not have to accept performance from the estate.

A sharecropper's contract included a no-assignment clause. (6) Nevertheless, upon the sharecropper's death, a court concluded his estate must farm the land and complete the contract. (7)

A music director's one-year employment contract with a singing icon provided for a $25,000 "guaranteed" salary. (8) When the singing icon died mid-year, a court concluded, despite the "unqualified character of the promissory words," (9) the music director was not entitled to the $13,100 unpaid balance. (10)

In several cases, the contract provided it would bind the parties, their heirs, executors, and administrators. Sometimes the courts said the deceased party's estate or other successor must perform the remaining contract obligations, (11) and sometimes the courts reached the opposite result. (12)

Why the inconsistencies? Courts generally seek to enforce the intent of the parties. (13) Contracts of the dead frequently present a challenging question--did the parties intend to specify the consequences of death when employing certain standard boilerplate clauses? (14)

This Article suggests guidelines and considerations for unearthing intent post-mortem and marshals the existing authorities that support, or dispute, these positions. Part I briefly discusses the taboo of death talk, the need to determine intent in these cases, and the presumptions courts sometimes fall back on in the absence of intent evidence.

Part II discusses contracts that clearly reveal an intent about death and suggests that courts should give great weight to any written contract language which specifically addresses post-death performance. Because parties seldom negotiate, draft, and include such direct clauses, (15) probably due to social taboos about death talk, courts should carefully analyze a written contract for clues that the parties implied that the arrangement should die (or survive) upon a party's death. (16)

Part III recommends that courts consider an ascribed-intent approach reflected in a handful of reported cases. This approach allows a court to analyze all relevant facts and circumstances and decide the case based on what reasonable parties would have intended in the situation.

Part IV considers common boilerplate clauses with language that arguably addresses death when there is no additional evidence about intent. Although explicit clauses addressing death are rare, boilerplate provisions that arguably address death abound. In some reported cases, courts interpret and rely upon the boilerplate to conclude whether the contractual obligations survive death. In other reported cases, courts are skeptical that standard boilerplate reflects the parties' intent about death and decide whether any remaining contractual obligations vanish at death without regard for the boilerplate language.

Part V surveys the meaning of certain common boilerplate clauses in isolation. Part V also considers policy concerns surrounding contracts of the dead and discusses options for interpreting boilerplate clauses that can allow courts to reach reasonable results.

The taboo of death talk justifies skepticism toward boilerplate in the murky land of contracts of the dead. In the absence of direct evidence of negotiations and agreements about death, courts should be inclined to terminate many contracts at death.

  1. INEVITABLE DISPUTES, JUDICIAL PRESUMPTIONS, AND THE PRIMACY OF INTENT

    Whenever a mortal makes an executory contract, death could precede performance. (17) "[C]ontracts must be read in the light of the knowledge of all mankind, that death may come tomorrow." (18) Although death is always foreseeable, (19) the Ninth Circuit has observed that, at the time of contracting, parties seldom directly address the impact death should have on contract performance. (20) This reflects society's aversion to talking about death. There may be no more disfavored conversation topic than your own death, (21) and some believe discussing death will hasten it. (22) Form books do not routinely provide sample boilerplate provisions directly addressing death. (23)

    As a practical matter, except when a party is known to be seriously ill, or particularly old, raising the topic in contract negotiations seems almost unthinkable. (24) If you propose contingencies based on the other party's death, are you hinting that their time is short? Or to use a euphemism, perhaps you are advising your fellow contract party: "Don't buy green bananas." (25) Also, what signals are you sending to the other side if you start speculating about your own death? Will the other side want to contract with you if you demonstrate a lack of confidence about surviving to fulfill your contractual duties?

    Standard boilerplate clauses have not prevented disputes in this area. As demonstrated in Part IV, the law is inconsistent when faced with general language about successors and assigns. In addition, some courts have even concluded that clauses stating that the contract is binding on heirs and executors do not resolve this issue. (26) As a result, executors and the surviving parties often call upon the courts to decide contract survival.

    In the absence of evidence of intent, courts have developed presumptions. A presumption is available to allow a court to declare that the contract survives death, and this is treated as the general rule. Courts applying this presumption have stated: "[D]eath does not absolve... [contractual] engagements," (27) and "It is a presumption of law that the parties to a contract bind not only themselves but their personal representatives." (28) On the other hand, a presumption is also available to allow a court to declare that contract obligations terminated at death, and this is treated as the exception. Courts applying this presumption have used the phrase "personal services contracts" and have referred to "contracts to whose performance the continued existence of a particular person... is necessary." (29) Courts have stated where the exception applies that "a condition is always implied that the death... of that person... shall excuse performance," (30) and that "[n]either party contemplates substitution by another." (31) In certain extreme cases, it seems likely that the nature of the services signals the parties' intent. Courts have characterized obligations such as agreements "to marry, to draw a picture, write a book, perform on the stage, be one's companion, etc." as "personal services contracts," which terminate upon the obligor's death. (32) Other courts have stated: "All painters do not paint portraits like Sir Joshua Reynolds, nor landscapes like Claude Lorraine, nor do all writers write dramas like Shakespeare or fiction like Dickens. Rare genius and extraordinary skill are not transferable, and contracts for their employment are therefore personal, and cannot be assigned." (33)

    These presumptions, which date back to Shakespearean England, (34) could be summarized as simply--all contracts survive death except personal services contracts. (35) Part V asserts that these presumptions are outdated. A couple cases, however, suggest that these presumptions are paramount in deciding contract survival. For example, a Pennsylvania court declared, "[a]ll contracts must be construed with reference to their subject matter." (36) A Missouri court asserted that sometimes obligations are "so purely personal in their nature as to leave no room for doubt but that the contract" died with the party's death. (37)

    Nevertheless, the majority of cases recognize the primacy of the parties' intent when deciding contract survival. (38) For example, in Warnecke v. Rabenau's Estate, (39) a tenant entered into a two-year lease for office space with the property owner, but the tenant died five months into the lease. (40) The building owner sued to compel the tenant's estate to pay rent for the balance of the lease term. The court asserted the presumption that "a lease for a term of years is not terminated by the death of the lessor, or the lessee." (41) Nevertheless, the court stated, "if the terms of the lease and the surrounding facts...

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