Anyone, anyone?
The online periodical Business Law Today will soon unleash on an unsuspecting world an article I co-authored. It includes the following snippet of contract language: “anyone commences an involuntary case against the Company …”
Does anyone apply only to individuals? Or does it also apply to entities? In other words, we’re in effect faced with the question raised in the political oddity featured in the video below: Are corporations people?
If you’re dealing with only entities, then anyone wouldn’t be the appropriate choice. But if the population in question could include persons and entities, I’m comfortable with using anyone. Contract prose would get too dreary if you had to always use any person or entity or the defined term Person.
Could a disgruntled contract party claim that a provision using anyone isn’t triggered if a company is involved rather than an individual? Sure. But people can make all sorts of crazy claims. The goal of the drafter is to leave a disgruntled contract party with only the most fatuous. I currently think that use of anyone satisfied that standard, but I could be persuaded otherwise.
I’m afraid that I would not be tempted to rely on “anyone” as a proxy for people and entities. We always define Person to include entities so that we can avoid the risk of ambiguity. There are just too many ways one could live to regret imprecision.
I’m with you. There’s no way “anyone” could rationally be mistaken for “individuals only.” But don’t forget, it takes two people to create a ridiculous legal principle: a desperate lawyer and a stupid or motivated judge.
And of course corporations are people, just as nations are. They’re aggregations of people. Sheesh.
People are entities! There are natural entities (“individuals”) and artificial entities (e.g., corporations, khanates). People are “legal entities,” too. So the question is whether “anyone” refers only to natural persons or also to artificial persons. (As Vance Koven aptly says, “Sheesh.”) If “anyone” is thought risky, “any person” is less so, and “any person,” where “person” is a defined term that includes natural and artificial persons, is as riskless as it gets.
I recognize that “entities” is lawyer’s shorthand for artificial persons, but in actual contract drafting, it’s better to be precise: “people and *other* entities.”
You’re right! *cringes* I’ll do a blog post on this soon.
Is there a statutory or case law definition of “entity”? I’m asking this because Black’s just says “Entity. An organization (such as a business or a governmental unit) that has a legal identity apart from its members or owners.”. I thought that ‘entity’ always implies the presence of more than one natural person—not sure where I got this from. According to you, I should be wrong, but I would be most grateful for a legal definition of ‘entity’.
Which Black’s do you read?
“A lawful or legally standing association, corporation, partnership, proprietorship, trust, *or individual.* Has legal capacity to (1) enter into agreements or contracts, (2) assume obligations, (3) incur and pay debts, (4) sue and be sued in its own right, and (5) to be accountable for illegal activities.” http://thelawdictionary.org/legal-entity/ (Featuring Black’s Law Dictionary Free Online Legal Dictionary 2nd Ed.)
I can be wrong — I eat mistakes for breakfast — but I can’t endorse Ken’s passionate cry, “All individuals are nonentitites!”
Many thanks for replying!
The definition cited by you is the definition of “legal entity” (not just “entity”, as in my case). Nevertheless, the definition of “entity” on thelawdictionary.org once again includes individuals: “Legally, equal to a person who might owe taxes. A generic term inclusive of person, partnership, organization, or business. An entity can be legally bound. An entity is uniquely identifiable from any other entity.”
The definitions of “entity” and “legal entity” from thelawdictionary.org seem to be close to the wide understanding of “legal entity” or “legal person” as any unit endowed with legal personality (whether natural or artificial person). As you said: “People are ’legal entities’, too”. It should be noted, however, that these two definitions and many (if not most) other definitions on the site are NOT from Black’s. For example, the 2nd edition of Black’s defines “entitle” and, next to it, “entrebat”—and there are 10 terms in between them on the site, see http://thelawdictionary.org/letter/e/page/37/.
Both “entity” and “legal entity” make their first appearance in the 4th edition (1968) of Black’s Law Dictionary and stem from the same phrase: “The word ‘entity’ means a real being, existence. ‘Legal entity’, therefore, means legal existence.” (Department of Banking v. Hedges, 136 Neb. 382, 286 N.W. 277, 281).
The 5th edition (1979) elaborates:
“Entity. A real being; existence. An organization or being that possesses separate existence for tax purposes. Examples would be corporations, partnerships, estates and trusts. The accounting entity for which accounting statements are prepared may not be the same as the entity defined by law.
An existence apart, such as a corporation in relation to its stockholders.
Entity includes person, estate, trust, governmental unit. Bankruptcy Code, § 101.
The 6th edition (1990) reproduces the same definition and adds:
“ ‘Entity’ includes corporation and foreign corporation; not-for-profit corporation; profit and not-for-profit unincorporated association; business trust, estate, partnership, trust, and two or more persons having a joint or common economic interest; and state, United States, and foreign government. Rev. Model Bus.Corp. Act, § 1.40.
[Aha, here I see “two or more persons” that came to my mind earlier. On the other hand, “real being” should include individuals, right? But they are not cited among examples].
The 7th (1999), the 8th (2004) and the 9th (2009) editions contain the definition I cited in the first place: “Entity. An organization (such as a business or a governmental unit) that has a legal identity apart from its members or owners.”
(That is, “entity” = “legal entity” in the sense of “artificial person”).
It is interesting that the definition of “artificial person” in the 9th edition contains the following comment: “An entity is a person for purposes of the Due Process and Equal Protection Clauses but is not a citizen for purposes of the Privileges and Immunities Clauses in Article IV § 2 and in the Fourteenth Amendment.” This remark does not seem to support the view that “entity” would include individuals.
The definition of “person” is subdivided into “1. A human being… 2. The living body of a human being… and 3. An *entity* (such as corporation) that is recognized by law as having most of the rights and duties of a human being. In this sense, the term includes partnerships and other associations, whether incorporated or unincorporated.
According to “Person 3.”, entities may be unincorporated.
So, our options are:
(1) Entity = something that exists by itself; something that is separate from other things (Merriam-Webster). That is person—i.e. one regarded by the law as a person. Including individuals.
(2) Entity = legal entity (“artificial person”). (Thus “entity” would exclude partnerships and other unincorporated groups of persons).
(3) Entity = association of persons, whether incorporated or not.
Wow! And yet I think the conclusion is slightly off. How about this:
(1) Entity = a member of the whole set of things that exist (pencil points, universes, thoughts, scars, gas clouds, partnerships, unincorporated associations, corporations)
(2) Legal Entity = an entity that has legal status for one or more purposes. Examples of legal entities are individuals, corporations, and in some jurisdictions but not others, partnerships.
The subset “legal entities” can be further subdivided into “natural legal entities” (individuals) and “artificial legal entities” (e.g., corporations).
In legal circles, some people (including Ken Adams) use “entity” to mean “artificial legal entity,” which is suboptimal except as an informal shorthand. Insisted upon, it’s like using “book” to mean “hardbound text with illustrations.” It rules out all paperbacks and all hardbound volumes without illustrations, which makes a hash of the taxonomy to no good purpose.
I’m rehashing old ground, but if the Black’s (9th ed.) definitions of “entity” and “legal entity” don’t refer to humanoids, how can I use either term as if it includes, uh, natural persons?