Today I saw the following in a contract I pulled from the SEC’s EDGAR system:
SunPower hereby guarantees that, subject to Section 22, it shall supply and deliver each of the Products to the delivery point specified in a given Purchase Order (each, a Delivery Point ) on or prior to the scheduled delivery date therefor [...]
Yesterday I revisited the question of the relationship between a license and the contract that grants the license.
This issue arose in connection with a trademark license agreement I’ve been redrafting. The original version says that the license is “nonassignable,” and I’ve been contemplating deleting that adjective on the grounds that the question of assignment of [...]
Warning: grammar nerdiness ahead.
In license agreements I see the following two alternative constructions:
Acme hereby grants Widgetco a license to …
Acme hereby grants to Widgetco a license to …
The second alternative represents the inferior choice. Consider the following sentences:
I gave John a book.
I gave a book to John.
*I gave to John a book.
The first sentence matches the [...]
MSCD 2.18 notes that the passive voice can be of use in contracts.
Consider the following example:
If any Person brings a proceeding to compel the Recipient to disclose any Confidential Information …
In this context, the active voice is wordy. It’s obvious that a proceeding would have to be brought by someone. Because it doesn’t matter who [...]
A court opinion doesn’t have to come from an exalted court in order for it to raise an issue of interest to drafters generally.
A case in point is Managment Strategies v. Hous. Auth. of New Haven, 2009 Conn. Super. LEXIS 1550 (Conn. Super. Ct. June 2, 2009). In that case, the following release language was [...]
D.C. Toedt has posted on his On Technology Contracts blog this item about an opinion of the Ninth Circuit Court of Appeals dismissing a case against Wal-Mart.
Here’s D.C.’s summary:
Wal-Mart requires its suppliers to agree to a code of conduct. It was sued, in California, by employees of suppliers in various Third World countries, on grounds [...]
I received the following cry of despair from a Canadian reader:
I’m preparing a partnership agreement and have been given precedent to work with. Using MSCD, I have spent some time trying to rework the precedent’s archaic language to make it more readable. It says, several times, “Each of the Partners severally represents, warrants, covenants and [...]
I’ve recently become acquainted with a specialized form of contract language—architectural specifications, which are attached to construction contracts and define the requirements for products, materials, and workmanship on which the contract is based and requirements for project administration and performance.
My entrée to this field was Andrew Wilson, whose business, AWC West, prepares custom-tailored architectural specifications [...]
I’ve learned that Twitter can serve as an early-warning system. Thanks to a Twitter update by Lance Goddard—he of the blog Are You Writing This Down—I learned that Jay Shepherd had posted on his blog The Client Revolution this item recommending that you run a mile from shall.
I took the liberty of posting this comment [...]
When in my “Language & Layout” seminars we discuss categories of contract language, I emphasize that in addressing a given issue one sometimes has a choice as to which category of contract language to use, but that one will work better than any other.
I encountered an example of that today. Consider the following provisions:
Acme may [...]
I’ve previously written in this blog about why I recommend that one use shall in a disciplined manner rather than throw it under a bus. Discussion of this topic features prominently in chapter 2 of MSCD, as well as in my October 2007 NYLJ article.
But it’s such a fundamental topic that it bears revisiting periodically, [...]
If you’ve perused chapter 2 of MSCD (Categories of Contract Language), you’re aware that I have a mania for disciplined use of verbs in contracts. But I haven’t previously had occasion to discuss use of can and cannot; I’ll do so now.
The word can is used to express physical or mental ability, as in he [...]
Another day, another unexpected contract usage.
Today, I saw the following:
Upon issuance of an oral or written work, service, or purchase order, Company thereby hires Contractor to promptly provide the products, materials, and supplies and perform the services set forth in the Order.
What caught my eye was the use of thereby. It raises the issue of [...]
In this post I described how I had heard someone cite by name some companies and one law firm—a multi-office U.S. law firm—that had foresworn use of shall. Well, recently I had the privilege of giving a series of seminars at that law firm, and I was tickled to be able to ask two senior [...]
I love it when I spot an issue and analyze it, and subsequently a case comes down that hinges on exactly that issue.
You may recall that in this June 2007 post I discussed two subtle issues involving may. One issue involved limited discretion and the expectation of relevance. Here’s what the manuscript of MSCD2 has [...]
In my recent article advocating disciplined use of shall I mention that I haven’t seen any evidence of a flight from shall.
At any given time individual lawyers, or groups of lawyers, or conceivably entire organizations, might eschew shall. But I have a hard time imagining that it could be commonplace for any group of lawyers—a [...]
Here’s yet another issue relating to use of may—the phrase may require.
My principal problem with may require is that in its most common use, it frames as Party X’s discretion what is best thought of as Party Y’s obligation. I recommend that you omit this use of may require in favor of language of obligation:
The [...]
The following sentences express the same meaning:
If it receives Acme’s prior written consent, the Vendor may cause one or more subcontractors to perform Services.
Unless it receives Acme’s prior written consent, the Vendor shall not cause any subcontractors to perform Services.
Which would you be inclined to use? Would your answer vary depending on which party you [...]
In this October 2007 post, I discuss how placement of only in a sentence can affect meaning. Well, here’s another issue relating to use of only—the ambiguity that arises when you use only in language of discretion.
Consider the following sentence:
Acme may close any one or more Contract Stores for any reason, and in doing so [...]
Today’s issue of the New York Law Journal contains my article “Making Sense of ‘Shall.’” Click here to go to the PDF reprint. And click here to access it for free—at least for the time being—on the NYLJ’s website. My thanks to those who were kind enough to review drafts of this article.
The topic of [...]
Reader Mike told me about IpVenture, Inc. v. Prostar Computer, Inc. (Fed. Cir. Sept. 28, 2007). I’m delighted that he did, because it’s yet another case that I can point to in making the argument that to control your drafting you need to clearly distinguish one category of contract language from another.
IpVenture owns and licenses [...]
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 [...]
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 [...]
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 [...]
It’s commonplace for contracts to impose on a party a duty to take a particular action even though that action has no nexus with the one or more other parties. Here’s an example:
Each party shall pay all expenses that it incurs in connection with the transaction contemplated by this agreement.
But if you think about, Acme [...]
The other day, a reader of this blog—I’ll call him John—contacted me about a problematic bit of contract language. (I’ll refer to it as “John’s language,” although he didn’t draft it.) To him, it was something of a mysterious nuisance, but when I read it, my heart went pitter-patter, in that I saw that it [...]
In a previous post on this blog, I discussed the distinction between conditions and obligations. I said that if you express conditions using language associated with obligations, you shouldn’t be surprised if a court concludes that what you had thought was a condition is in fact an obligation.
A recent case, Cumberland Farms, Inc. v. Rian [...]
In any contract, may can be used to convey two meanings. (I’m not counting the superfluous may discussed in MSCD 3.58.)
May primarily serves to convey discretion, as in The indemnified party may at its expense retain separate co-counsel.
But may can also be used to convey the possibility of something coming to pass, as in Acme [...]
A Manual of Style for Contract Drafting refers only once to the verb acknowledge. Heck, it doesn’t even merit an entry in the index. I’ll now give it the treatment it deserves.
Language of Performance, Revisited
I have to start by reassessing the categories of contract language. (If you just want the nitty-gritty, you might want to [...]
One of the joys of being a contract-drafting guy is that I don’t have to dwell on the mess that results when courts have to make sense out of contract language that’s unclear. Instead, I focus on how to avoid such problems.
But it’s a good idea to look at case law every so often, if [...]
For a couple of years now, the phrase at its [or his or her] discretion has been at the back of my mind, and I’ve finally gotten around to giving it some thought. This post addresses use of at its discretion in language of discretion, as in Acme may at its discretion terminate this agreement. [...]
I recently posted an item in which I explain why I favor disciplined use of shall, even as some legal-writing commentators recommend discarding it.
As I mentioned in that post, usually will and must are offered as alternatives to shall. But I just hear of another suggested alternative: a participant in one of my Geneva seminars [...]
