In the course of revising a draft contract, I encountered the following;
Upon occurrence of a Change in Law or a Force Majeure Event that adversely affects the Seller’s performance under this agreement, the Buyer and the Seller shall negotiate in good faith whether to issue a change order addressing the effect of those circumstances and the terms of any such change order.
I said to myself, Hmm, is the obligation triggered by “occurrence of a Change in Law” or “occurrence of a Change in Law … that adversely affects ….”? In other words, this provision exhibited syntactic ambiguity. The intended meaning was the latter.
If I had wanted to leave the structure as is, the only way to eliminate the ambiguity would have been to repeat the “as adversely affects” language, which would have been clunky.
So instead, I eliminated the abstract noun “occurrence,” which was dead weight anyway:
If a Change in Law or a Force Majeure Event adversely affects the Seller’s performance under this agreement, the Buyer and the Seller shall negotiate in good faith whether to issue a change order addressing the effect of those circumstances and the terms of any such change order.
Voilà! No syntactic ambiguity, and three fewer words to boot. I then went on to make other changes to that sentence.
Kudos for erasing the ambiguity.
A few other questions occurred to me concerning the provision:
1/ Isn’t it really a “parties may agree to different terms” provision, and hence unnecessary, since the parties are always free to modify by mutual consent?
2/ What’s an “adverse effect on performance”? A nonperformance?
3/ The imposition of a duty to negotiate in good faith over a party’s breach is problematical, because when would an implied or stated duty of good faith ever require a party to agree to change the deal?
You quickly get into distinguishing between “essential” and “nonessential” terms of the contract, where the non-breaching party’s refusal to modify an “essential” term would not show bad faith, but refusal to modify a “nonessential” term would show bad faith.
This issue is kin to the partial invalidation situation where a court knocks out one or more provisions.
I believe Ken’s position on that is that the best the drafter can do is to identify provisions the invalidation of which will invalidate the whole contract.
If it won’t help in the invalidation situation to require good faith negotiation over modifications to the deal, it probably won’t help in the force majeure or change in law situations, either.
Any benefit in adding “either” before “a”?
In a word, no.
Hi Ken – in the interest of eliminating ‘dead weight’, I submit that your response to ‘doubled’ should have simply been “No.”
Just kidding – I love your work (just found your blog by accident).
Thanks, it’s a good example! However, even as you have rewritten, it’s still ambiguous: does any change in law trigger the obligation, or only changes in law that adversely affect the Seller’s performance? You need to enumerate to eliminate the ambiguity, for example: “Upon the occurrence of either (i) a Change in Law, or (ii) a Force Majeure Event that adversely affects the Seller’s performance under this Agreement, then the Buyer and Seller shall negotiate in good faith . . .” Alternatively, if the other meaning, then “Upon the occurrence of (i) a Change in Law, or (ii) a Force Majeure Event, either of which adversely affects the Seller’s performance under this Agreement, then the Buyer and Seller shall negotiate in good faith . . .”