I use both words and numbers in my contracts purely from a clarity point of view.

It’s especially useful when dealing with European countries when the comma and decimal point are swapped over, e.g. one thousand four hundred and twenty euro and 25 cent are written down as €1,420.25 by the Brits and Americans but written down as €1.420,25 by the rest of Europe – not impossible to work out of course, but writing it in words as well just keeps it clear for those not familiar with this.

On an aside, I’ve seen contracts where someone has changed the words or numbers, but not the other one, e.g. “five (10) days”, so which takes precedence? I would guess that the contra proferentem rule would operate – any thoughts?

Best wishes,

Jonathan

With a handwritten check, it is often easy for a dishonest payee to insert a “1″ in front of the amount that is expressed in numerals. Once the check is cashed, it may be hard to get the money back. Failing to use words for the dollar amount in this circumstance may expose the maker to a defense of maker negligence when the maker seeks to charge the unauthorized increase back to the bank.

With a promissory note (at least those prepared by lawyers), the note will typically be typed or printed via laser printer, and the $ symbol will usually precede the dollar amount without a space. It’s much harder to insert a “1″ in front of the dollar amount and not have it look like an obvious alteration.

But even if it were quite feasible to insert that “1″ (because the draftsman made the mistake of leaving a space between the $ symbol and the dollar amount and the fraudster can match the font of the original document), the holder of the note can’t automatically deduct funds from the maker’s account. If the holder presents a note whose face amount has been altered, the maker will balk at paying.

Most promissory notes are tied to a transaction of some sort (a loan of money, a sale of goods or real property, etc.), and the underlying transaction will usually have sufficient documentation to make it clear whether the original note was for $10,000 or $110,000. An altered note is payable, if at all, only in accordance with its original terms.

The custom of always using words and numerals for dollar amounts originated long ago, in the era when legal instruments were handwritten by professional scriveners, and my guess is that the reason for this custom was, at least in part, to prevent easy alteration of the dollar amount.

But bear in mind that writing a check is very different from entering into a contract: it’s something you do routinely, and on your own. So I don’t think a usage that’s appropriate for one has much relevance for the other.

Ken

When you use both words and numerals to write a check to your local grocery store, it somehow seems inappropriate to draft a note for millions of dollars and NOT write out the amount of the principal. Logical? I don’t know, but I suspect that will be my style for a long time to come.