More Fun with Language of Discretion—”Party X Hereby Grants Party Y the Right to [Verb]”

Yesterday was devoted to grading assignments submitted by students in my Penn Law contract-drafting course. One of them unintentionally made me aware of the formula Party X hereby grants Party Y the right to [verb]. It's language of performance functioning as language of discretion. If a contract contains the provision Acme may sell the Assets, it's appropriate for the reader to read that as … [Read more...]

“Unless the Parties Agree Otherwise”

In grading student assignments, I found myself commenting on their use of unless the parties agree otherwise. I thought that I had already written something somewhere about this phrase, but evidently not. So here goes: As a general matter, the phrase unless the parties agree otherwise is redundant. The parties could agree to waive, amend, or delete any provision in a contract, whether or not … [Read more...]

Two Oddities

I've resisted the temptation to turn this blog into a drafting freak show. But what the heck—step right up! ... In this article I offer plenty of mix-and-match efforts provisions, but the one immediately below nevertheless caught my eye as I was trawling through EDGAR today—three different efforts provisions in one! NNOG will use its best good faith reasonable efforts to cause NN to agree to … [Read more...]

Using a “Master Agreement” Structure

I've occasionally worked on transactions involving parties who plan on engaging in discrete projects from time to time. Generally these transactions have been structured so that one contract governs unchanging aspects of the relationship—perhaps payment, delivery, dispute resolution, and plenty of other matters—and a separate contract governs each project and specifies what needs to be done, when, … [Read more...]

“Intentionally Omitted”

One of the participants at my recent Washington, D.C. seminar asked me about the notation "intentionally omitted." I love being asked about stuff I hadn't ever thought of writing about. "Intentionally omitted" is used in a contract to indicate when the text of an article, section, subsection, or enumerated clause has been omitted while leaving the enumeration of that unit intact. It's an … [Read more...]

“May But Is Not Required To”

Reader Mike reminded me of the usage may but is not required to, as in the following provision: Indevus may, but is not required to, assist Esprit, at Esprit's election, in Esprit's efforts to seek and obtain FDA Approvals, subject to reimbursement of Indevus' related costs and expenses. The word that comes to mind is "lame"—may expresses discretion, so is not required to is redundant. Am I … [Read more...]

IACCM Executive Workshop in Seattle on Monday, September 24th

If commercial contracts are your thing and on Monday morning you find yourself in the Seattle area with some time on your hands, you might want to consider attending a presentation by Tim Cummins, president and CEO of the International Association for Contract and Commercial Management (IACCM to its friends). The presentation is being hosted by Starbucks. You don't need to be an IACCM member to … [Read more...]

“Will Not Be Required To” as an Alternative to Conditions

I've already had occasion to consider the distinction between obligations and conditions. (Click here and here.) Well, here's another thought: If satisfaction of a condition would trigger an obligation on the part of another party, then instead of using a condition to express that concept you may want to use languagage of discretion using will not be required to. (For more about is not required … [Read more...]

Document Analysis and Wordsensa Professional—Q&A with Sue Jakobek, VP Business Development of Adsensa

I recently spoke with a large company that was preparing to drastically reduce the number of template contracts that its lawyers and business people had to work with. The process was going to involve close review of its current templates, of which there were dozens. That seemed like a daunting prospect. Around the same time, I first heard of Wordsensa Professional, a technology aimed at greatly … [Read more...]

Another Article on What “Material” Means

The Sept.–Oct. 2007 issue of "Deal Lawyers" contains my article "What does 'Material' Mean." Click here for a copy of the entire issue. This article represents a boiled-down version of my recent New York Law Journal article on the subject. But thanks to valuable input from two readers of this blog, I've made some useful changes: I jettisoned the defined terms "Non-Trivial" and "Trivial" in … [Read more...]

“Reasonable Endeavours” and “Best Endeavours”—The Australian Angle

A reader from Australia emailed me the following: You may be interested to see what the Courts of New South Wales make of the "difference" between "best endeavours" and "all reasonable endeavours"—pretty much nothing (usually), which reflects what the law in Australia has been for over 20 years. Here's how a recent Chief Justice of our High Court put it: "[A]n obligation to use best … [Read more...]

Toronto “Language and Layout” Seminar on December 10th

On December 10th I'll be in Toronto doing my "Contract Drafting—Language and Layout" workshop for Osgoode Professional Development. Click here to go to the relevant page of Osgoode Professional Development's website; click here to see the brochure. My three previous Osgoode workshops have been two-day affairs. Why only one day this time? The first day of each of the two-day workshops has … [Read more...]

A Useful Article on Sarbanes-Oxley and the Contract Process

Yesterday I encountered an article that discusses why Sarbanes-Oxley should be of concern to anyone who's responsible for a public company's contracts. There are doubtless other works on this subject, but I'm cheerfully unaware of them. Here's the citation: Colin P.A. Jones, Sarbanes-Oxley and the Inch-Thick Contract, 5 Richmond Journal of Law and Business 1 (2005). Click here for a … [Read more...]

“Basis” (Including “Timely”)

Here's another weapon in the never-ending war on verbiage in contracts—be careful how you use the word basis. As Bryan Garner says in Garner's Modern American Usage, "The word basis often signals verbosity in adverbial constructions." So instead of on a daily basis, try daily, as in "Interest will accrue on a daily basis [read daily]." (In other words, use daily as an adverb rather than as an … [Read more...]

An Oddity at the Chicago Style Q&A

When I'm stymied by a particular English-usage question and I can't find an answer in my usual sources, I'll consult the Chicago Style Q&A, an online resource of The Chicago Manual of Style. I was browsing the Q&A the other day—I'm waiting breathlessly for them to post an answer to a question I submitted—when I saw the following: Q. Contracts often employ defined terms in quotes and … [Read more...]

The Definition of a Defined Term Doesn’t Constitute a Lexical Definition

The opinion in Johnson & Johnson v. Guidant Corp. (the case I discuss in my post "'Willful'—It's Ambiguous") contains the following statement: The relevant language in the no-solicitation clause defines the term "Representatives," with some circularity, as "any investment banker, financial advisor, attorney, accountant or other advisor, agent or representative." This reflects a common … [Read more...]

“Willful”—It’s Ambiguous

You should avoid using in your contracts the word willful (alternative spelling wilful), as it's ambiguous. This lesson comes courtesy of Judge Gerard E. Lynch of the Southern District of New York, in his opinion in Johnson & Johnson v. Guidant Corp., 2007 U.S. Dist. LEXIS 64114 (S.D.N.Y. Aug. 29, 2007). (Click here for a copy of this case.) This case involves the dispute that followed on … [Read more...]

Using Defined Terms in the Recitals

Here's a point that I don't make in MSCD but will be sure to make in MSCD2: Don't use in the recitals defined terms that are defined later in the contract. The job of the recitals is to introduce the transaction. If you put in the recitals a defined term that's defined later, you force the reader to go in search of the definition of that term. As a result, it takes longer to read the recitals. … [Read more...]

Where to Put the Conditional Clause

Dick Wydick's materials for our panel discussion at the ABA annual meeting included the following provision from the merger agreement for a transaction valued at more than $2 billion. (Like Dick, I've eliminated any identifying information.) As you read through it—I recommend a side order of Valium—ask yourself why Dick found it of interest. In the event that (y) Parent is not able to obtain … [Read more...]

Including “Circumstance” in the Definition of MAC

A reader in Italy asked me about a short article that he had seen on www.breakingviews.com. I wasn't familiar with this site, but it describes itself as "the leading international source of online financial commentary." (Click here to go to the article; you'll need to subscribe, or at least register for a free trial.) The article in question is about "material adverse change" (MAC) provisions. … [Read more...]