Readers tell me that businesspeople keep asking them to cut from contracts that which is unduly risk-averse or plain old unnecessary. Lawyers might be inclined to attribute that to businesspeople doing what they gotta do. In this view of things, lawyers are a bulwark against rank expediency.
But there’s is a lot of fat in contracts, and in the coming months I intend to write an article exploring that. Today, I’ll limit myself to considering one instance of fat, the “cumulative remedies” provision.
You know the sort of thing. Here’s a random one from that great Pacific garbage patch, Edgar:
Cumulative Remedies. No remedy referred to in this Agreement is intended to be exclusive, but each shall be cumulative and in addition to any other remedy referred to in this Agreement or otherwise available under applicable Laws.
Negotiating and Drafting Contract Boilerplate (ed. Tina L. Stark 2003) contains useful background information on boilerplate provisions. Here’s some of what it says about the “cumulative remedies” provision (citations omitted):
The modern day general rule is that all remedies, whether at common law, under statute, or under equitable principles, are cumulative. In the event of a breach of contract, the nonbreaching party is allowed to pursue any and all remedies that may be available under the facts of the particular case during litigation, even though some of those remedies may be inconsistent with each other. Ultimately, a court will require a plaintiff to choose between inconsistent remedies as necessary to avoid overcompensating the plaintiff. Generally, this must be done after the verdict is entered and prior to the entry of judgment, although there is substantial discretion left to the courts as to this timing, and in some cases courts have compelled election quite early where they felt that evidence as to both remedies was confusing. Finally, the question of whether two remedies are inconsistent in any particular case is heavily fact dependent and here too trial courts have substantial discretion in allowing a plaintiff to pursue multiple, seemingly inconsistent remedies.
Might there ever be a context where a “cumulative remedies” provision makes sense? Again, here’s Negotiating and Drafting Contract Boilerplate:
When the parties truly intend to have cumulative remedies apply, it is tempting to conclude that the modern day common law rule covers the situation and toss out the cumulative remedies provision as needless boilerplate. There are times, however, that the provision serves as more than a calcification of the common law. Perhaps most importantly, it removes uncertainty as to whether an individual state’s law is applying the modern default rule or a classic election of remedies approach. A cumulative remedies provision, if purposefully chosen, also will remove possible ambiguity about whether “special” remedies provided in one portion of the contract were intended by the parties to be the exclusive remedy for a particular breach.
Regarding the notion that the “cumulative remedies” provision can spare you uncertainty over what the default rule will be in a given jurisdiction, I’ll accept that as a justification only if someone shows me some evidence for that sort of uncertainty.
As for including a “cumulative remedies” provision in a contract that provides for special remedies (such as liquidated damages or an injunction), that concern could be addressed simply by saying “in addition to any other remedies available by law” or some such.
So that’s why I can’t remember the last time I elected to insert a “cumulative remedies” provision in a contract.
Would my analysis be any different under English law? I consulted my copy of Mark Anderson and Victor Warner’s A-Z Guide to Boilerplate and Commercial Clauses but didn’t find a discussion of the broader context. Unless anyone presents compelling evidence to the contrary, I have no reason to assume that the implications of the “cumulative remedies” provision under English law are different from what they are under the law of U.S. jurisdictions.
Ken, while I concede you’re right, it’s like candy – unnecessary but really sweet. We have in the past drafted explicit remedies for a breach in some contracts (e.g., reperforming the work) used that remedy, and then set off damages afterwards. Counterparties thought they were done, and got off ‘free’ after part one only to find they weren’t. Did we need it? No. Did it stop an argument in their tracks? Yes. For one small sentence, I maintain there are worse drafting sins.
Wouldn’t “in addition to any other remedies available by law” do the trick?
Recently came across a contract that had the “in addition to other remedies available by law” type provision scattered throughout the agreement (at least double figures of references, in most places where a specific remedy was discussed). In that circumstance, I took the view that a single Cumulative Remedies clause would eliminate the (then) unnecessary repetition of that phrase in the rest of the document. It also can include an “Unless otherwise specified” lead-in, which allows for making certain remedies (e.g. liquidated damages) exclusive.
Thoughts?
That sounds sensible, but it might be that the original was poorly organized.
I’ve had to look at the English position on this recently and the English courts would seem to agree with Ken. All remedies will be available unless clear language in the relevant agreement makes for exclusive remedies. See Hardcap Limited v F.K. Generators & Equipment Limited [2017] EWHC 2765 (Comm) at paras 26, and 75 and following.
Thanks for the info.
What about the converse? For example, in a construction contract where the contractor has little bargaining power, and the indemnification provisions vast, isn’t it important to state those provisions are exclusive, and not in addition to others available at law or otherwise?
I generally use a version of this not as a cumulative-remedies clause so much as a non-limitation-of-remedies clause. I don’t want the argument that a specific remedy mentioned in the contract is intended to be the sole remedy based on some kind of inclusio unis argument. I could put “in addition to other remedies available by law” everywhere that might occur. But that has a few problems. First, it won’t take many instances of stating that provision before it becomes wordier and more fat than a single sentence at the back of the contract. Second, if I miss one (or the other side argues that something is a remedy), then I’ve reinforced the inclusio unis argument against me.
Sure!