Welcome to The Nonlinear Library, where we use Text-to-Speech software to convert the best writing from the Rationalist and EA communities into audio. This is: Book Review: Working With Contracts, published by johnswentworth on the LessWrong Contracts is one of those areas that I always figured I ought to study, at least enough to pick up the basics, but never seemed either interesting or important enough to reach the front of my queue. On top of that, there’s a lot of different angles from which to approach the subject: the law-school-style Contracts 101 class covers the legal principles governing contracts, the economists’ version abstracts away the practical specifics and talks about contracts in game-theoretic terms, more business-oriented books often focus on negotiation, etc. “Working With Contracts: What Law School Doesn’t Teach You” is about the practical skills needed for working with contracts on an everyday basis - specifically the sort of skills usually picked up on the job by young lawyers. It talks about things like what to look for when reviewing a contract, how to organize contracts, why lawyers use weird words like “heretofore”, various gotchas to watch out for, etc. It assumes minimal background knowledge, but also includes lots of technical nuts and bolts. In short, it’s the perfect book for someone who wants a technical understanding of real-world contract practice. This post will review interesting things I learned from the book. Background Knowledge First, some very brief background info, which the book itself mostly assumes. Legally, in order to count as a “contract”, we need four main pieces: Offer: someone offers a deal Acceptance: someone else accepts it Consideration: both parties gain something from the deal; it’s not a gift Mutual understanding: both parties agree on what the deal is and the fact that they’ve agreed to it A Contracts 101 class has all sorts of details and gotchas related to these. Notice that “signature on a piece of paper” is not on that list; e.g. oral contracts are entirely enforceable, it’s just harder to prove their existence in court. Even implicit contracts are enforceable - e.g. when you order food from a restaurant, you implicitly agree to pay for it, and that’s a legally-enforceable contract. That said, we’ll focus here on explicit written contracts. Once formed, a contract acts as custom, private law between the parties. Enforcement of this law goes through civil courts - i.e. if someone breaches the contract, then the counterparty can sue them for damages. Note the “for damages” in that sentence; if a counterparty breaches a contract in a way that doesn’t harm you (relative to not breaching), then you probably won’t be able to sue them. (Potentially interesting exercise for any lawyers in the audience: figure out a realistic contractual equivalent of Newcomb’s problem, where someone agrees to one-box on behalf of someone else but then two-boxes, and claims in court that their decision to two-box benefited the counterparty rather than harming them. I’d bet there’s case law on something equivalent to this.) Note that this is all specific to American law, as is the book. In particular, other countries tend to more often require specific wording, ceremonial actions, and the like in order to make a contract (or component of a contract) enforceable. What Do Contracts Do? The “functional” components of a contract can be organized into two main categories: representations and covenants. A representation says that something has happened or is true; a covenant says that something will happen or will be true. Some example representations: ABC Corp signs a statement that they have no pending lawsuits against them. Bob signs a statement that the house he’s selling contains no lead-based paint or asbestos insulation. Carol signs a statement that the forms she provided for a mortgage application are accurate and complete. Title Corp signs a statement that there are no outstanding m...