I am sure you, like me, have been on the lookout for an elegant, readable, sophisticated and fairly short book about sovereign debt agreements. And one that happens to end as a critique of elite legal practice. And here it is, The Three and a Half Minute Transaction: boilerplate and the limits of contract design by Professors Gulati and Scott. It blends economic and behavioural theory, history and law, qualitative and quantitative data with solid and measured arguments.
The book in outline is about this problem: if sovereign debt agreements have a clause which does not appear to make much sense and a court interprets that clause in a way which makes even less sense, what would you do? And by you, I mean a highly paid, highly intelligent, sophisticated practitioner in a leading law firm specialising in such blue riband work? Don’t rush, there are only many millions resting on it. Might you redraft future agreements to avoid the problem or might you leave the troublesome clause (the only one with a Latin name, wouldn’t you know it) as it is? Would your choice be influenced by the fact that there is a less risky version of the clause? And would your professional judgment on such matters be based on a full understanding of the purpose of the clause (it’s the pari passu clause) and the legal implications of leaving or changing it?
