Do We Really Need the Defined Term “Contract”?

Last week I noticed this tweet by @BlakeReagan2:

It has been a while since I’ve used contract as a defined term, so I grabbed the following examples at random from the U.S. Securities and Exchange Commission’s EDGAR system:

Contract” means all legally enforceable contracts, agreements, understandings, arrangements and commitments, whether written or oral, excluding Purchase Orders.

Contract” means any agreement, contract, license, lease, commitment, arrangement or understanding, written or oral.

Contract” means any written agreement, license, contract, obligation, indenture, instrument, lease, promise, arrangement, release, warranty, commitment or undertaking.

Contract” means any contract, subcontract, agreement, commitment, note, bond, mortgage, indenture, lease, license, sublicense, permit, franchise or other instrument, obligation or binding arrangement or understanding of any kind or character, whether oral or in writing.

Contract” means any contract, agreement, commitment, arrangement, undertaking or understanding of any kind whatsoever, written or oral, together with all related amendments, modifications, supplements, waivers and consents.

zzzzzzzzzzzzzzz. What! Oh, sorry, I must have nodded off.

These definitions raise two issues. First, do we need to define contract? Don’t we know what a contract is? Here’s the definition of contract in the ninth edition of Black’s Law Dictionary:

contract, n. (14c) 1. An agreement between two or more parties creating obligations that are enforceable or otherwise recognizable at law <a binding contract>. … 2. The writing that sets forth such an agreement <a contract is valid if valid under the law of the residence of the party wishing to enforce the contract>.

(Incidentally, I hope that the tenth edition of Black’s Law Dictionary uses a better example to illustrate the second meaning, as the example provided in the ninth edition in fact illustrates the first meaning, not the second. I would have used “He ripped up the contract in a fit of rage,” or some such. Black’s is certainly fallible.)

Well, we might need a definition of contract, as all of the quoted definitions except the first includes agreement, without any further qualification. People can reach all sorts of agreements, such as an agreement to go to the movies on Saturday; only those that are legally enforceable constitute contracts. Mind you, I don’t know what Black’s means by “otherwise recognizable at law.” Can an agreement be recognizable at law but not enforceable?

The second issue with the quoted definitions is why the heck are we inundated with references to different kinds of contracts? This is a great example of what I call “needless elaboration.”

So I suggest that if you feel the urge to create a defined term for contract, use the following:

Contract” means a legally enforceable agreement, whether written or oral.

Even though the reference to “written or oral” is, strictly speaking, itself needless elaboration, I included it because I don’t want to get into a fight over whether an oral contract is a contract. But I don’t feel it necessary to refer to amendments.

Further tweaks might be justified, depending on the context. Take for example the way the first example excludes purchase orders.

Posted in Defined Terms | 6 Comments

  • http://headoflegal.com/ Carl Gardner

    On “otherwise recognizable at law”, I wonder if that might cover some private international law situations where no one doubts that’s something’s a contract, but there’s a dispute about whether it can be enforced in the particular court.

    • Vance_Koven

      Yes, and I believe that in some jurisdictions a contract to make a will or to make a charitable donation aren’t enforceable.

  • Chris Lemens

    Ken:

    I could see some cases where I might use something to say that certain things are or are not included.
    1. If I was acquiring a government contractor, it might be important to say that contracts includes subcontracts, since they talk about such things as if they were different.
    2. Some of the provisions you cite include licenses and permits, which I would not normally consider to be a contract. But it might make sense, for the sake of brevity, to lump them al together if the substantive provisions applying to contracts and permits were the same.
    3. Likewise, a license or mortgage is technically not a contract, but a property status created by contract, so (if important) it might be useful to clarify. And a non-contractual representation might be usefully added to some of these lists, since the claim might be fraud, not breach.
    4. Finally, some of the listed things might not be contracts, but could generate a lawsuit against which a purchaser might want indemnity. For example, someone could sue on a promise that is not a contract.

    Not very helpfully, I would say that I might include some or all of these depending on the context and how important it is.

    Chris

  • AWrightBurkeMPhil

    The Black’s definitions show that the word “contract” can mean the (intangible) agreement itself or the (tangible) document that sets forth the agreement.

    The two are as different as map and territory, photograph and subject of photograph, fact and proof of fact, creator and creation; oath and certificate of oath, lien and certificate of lien, mortgage and mortgage deed, deed and transfer of title, debt and promissory note, acknowledgement and certificate of acknowledgment, summons (act of summoning) and writ of summons, etc.

    A “contract” in Black’s second (documentary) sense can be destroyed without affecting the ongoing validity of the “contract” in the first (intangible) sense.

    Ken’s admirably concise definition seems to blur the distinction, although maybe not; the answer depends on whether the definition envisions a “written agreement” to be tangible or intangible. The phrase could be shorthand for “an agreement made or evidenced by a writing.”

    I have difficulty imagining circumstances in which the distinction would matter, but our hypothesis is that a particular agreement requires us to define the word “contract,” so into the breach we go.

    “Contract” means “a legally enforceable agreement, regardless of how made or evidenced.”

    This doesn’t purport to address the interesting issues raised by Carl Gardner, Vance Koven, and Chris Lemens.

    • Chris Lemens

      +1 for saying map and territory!

  • Mark Anderson

    Like a good common lawyer I would much prefer to have a set of facts before passing judgment on whether a definition is needed. How is the definition used?

    Some of these definitions remind me of the wording of Article 101 of the Treaty on the Functioning of the European Union, which prohibit anticompetitive agreements, understandings and decisions between undertakings and associations (this is not exact wording). There is much case law on the meaning of each word used in Article 101(1).