13th June, 2006

What hapened to fairness in contracts?

Last week, I was hill walking with friends. We were talking about an article we had read about the climber on Everest who lay dying at high altitude, having run out of oxygen. Forty other climbers passed him without offering help, and in a short time he was dead.

"Above 26,000 feet is not a place where people can afford morality", one was quoted as saying.

What has this got to do with the practice of law in Scotland? Well, it seems that the traditional mountaineering code of camaradie and mutual support has been replaced, at least above 26,000ft,. with a rather more disreputable one of each man for himself: expect no help from me, chum, I'm worried that the same attitude is now finding its way into business and commerce and into the very fabric of the way we advise clients. Or more accurately: the way clients expect to be advised.

Take leasing, for example. The Law of leases in Scotland is governed by principles of fair dealing between landlord and tenant, providing a balanced division of rights and responsibilities, particularly as regards keeping the property in condition and repair. If an unexpected problem arose, these principles could be brought to bear to solve it. True, there would be a winner and a loser, but neither party could fairly claim to have been "shafted".

Then about 40 years ago along came the full repairing lease, introduced from England by investing institutions.

Overnight leases quadrupled in length, with the text of the contract seeking to cover every eventuality. Out went the principles of fairness, and in came a kind of "loophole" ping-pong". Tenant lawyers would argue that the text did not cover a particular type of cost. Landlord lawyers would introduce a clause in their next lease to cover it. Long documents got even longer.

I am not decrying this process as such. Indeed I make my own living out of it. My point is that somwehere along the line the parties have stopped thinking they ought to play fair with each other. They don't ask themselves What is the right thing to do here?"

Instead they ask their lawyers "What am I obliged to do?" Th answers are rarely the same.

Leasing is only an example of this. Nearly every economic transaction in which we engage is now circumscribed by a hinterland of small print, itself the product of loophole ping-pong. The result is that when someone falls foul of the system, and runs out, as it were, of oxygen, the response is likely to be like the stricken Everest climber: you're on your own , expect no help.

Banks now routinely trash and thrash customers with small print. Companies put rivals to the sword, claiming a duty to their shareholders (do they ever ask them first?).

Local authorities, for all their bureaucracy, traditionally a respository of fair dealing, now exploit every opportunity to demand ransom prices for small corners of ground, or release of ancient burdens. The trouble is that the system, and the culture it generates, is bigger than any one part. but, as lawyers, we need to acept that we helped create it. As often as not the test is not "who is right?" but "who's got the best words?".

I'm a wordsmith, but that bothers me all the same.