Is Anyone Familiar with This Cross-Referencing Convention?

At yesterday’s “Drafting Clearer Contracts” seminar in Aarhus, Denmark, for MHI Vestas Offshore Wind, one of the participants asked me whether I was familiar with the convention that has internal cross-references stated in initial capitals (Section 5.4) and cross-references to other contracts stated in all-lowercase letters (section 3.2 of the Distribution Agreement).

I said I was unfamiliar with that convention, but that it didn’t make sense to me. Have you encountered it? If enough of you have, I’ll mention it in the fourth edition of MSCD, if only to gently dismiss it.

(Don’t be alarmed—the fourth edition is a couple of years away, but I’m already collecting materials for it.)

Posted in Drafting as Writing | 10 Comments

  • http://rickcolosimo.com Rick Colosimo

    Never seen it. It would seem to be a recipe for disaster with a mere seemingly stylistic change having a substantive effect. Anytime I cross-reference to something other than the existing document and its numbering system, I use the name of the other document or its defined term (“Section 1.7 of the Purchase Agreement”). That includes exhibits and schedules to the current document; they often have otherwise overlapping numbering systems (“Section 2.1 of Schedule A”).

    • http://www.adamsdrafting.com/ Ken Adams

      I don’t think that the participant who mentioned this convention thought it had any substantive significance. I’ve revised to post to make it clear that when you refer to a section of some other contract, you of course have to say which contract.

      But am I correct in thinking that in cross-references you favor using a capital “S” for “section”? Hmmm. Report for reindoctrination immediately! ;-)

      • Chris Lemens

        Ken:

        Humbug! Of course there ought to be a capital S, because that’s what happens if you use Word well. And, since it is the most commonly used piece of legal technology in existence, I don’t know why you wouldn’t.

        The reason why the S is capitalized is because that is what happens if you use Word styles to create a heading style that supplies “Article,” “Section,” and (if needed) “Subsection” before the heading numbers. If you then use automated cross-references, you don’t have to figure out whether it is an article, section, or sub-section. Word doe sit for you. That, in turn, reduced the chances of pointing to the wrong level of the agreement structure in a cross-reference (e.g., to article 3 instead of section 3.1). Want details? Read that broadside I sent you a couple months ago.

        I also would not put a lot of substantive importance on whether the s is capitalized. But, because word capitalized internal cross-references for me, I usually use capitals for parts of the same document and lower case for anything in a different document. But that’s just as a convenient signal for the reader, and only in long documents. Most of my contracts are too short to have references to other documents.

        Chris

        • http://www.adamsdrafting.com/ Ken Adams

          Chris, this is not the place for our war-to-end-all-layout wars! Patience!

          • Chris Lemens

            Ken:

            Cease-fires are soooooo boring!

            Chris

  • Kyle Mitchell

    The closest analog in my experience is underlined internal cross references in contrast to external references without emphasis.

    For an example, see Section 2.2(d) of the National Venture Capital Association’s model Right of First Refusal and Co-Sale Agreement:

    http://nvca.org/index.php?option=com_docman&task=doc_download&gid=73&Itemid=93

    In that context, “Restated Certificate” is a corporate charter, as amended, that is not incorporated by reference.

    • http://www.adamsdrafting.com/ Ken Adams

      Interesting! This reminds me that the NVCA documents are hard-core traditional contract drafting.

      • http://rickcolosimo.com Rick Colosimo

        Don’t worry: I plan on making some DIY revisions in my next project!

    • Jason McInnes

      I have encountered the lower-case “s” convention, but I have more commonly encountered the underline/no-underline convention described by Kyle. Although I hadn’t put much thought into it (just trying to make the partners happy and not get yelled at for bucking conventions), I think in my mind I had explained these conventions this way: (1) lower case “s” for external references because “Section” is a defined term in this document referring to sections within this document; (2) underlined “Section” as a convention for internal cross-references (underlined to make internal cross-references easy to find for a poor first year doing a cross-reference check), but no underline for external cross-references so as not to confuse internal cross-references with external ones (even though from the context it should be clear that the cross-reference is to an external document).
      Now that I’m in-house and have more control over my documents, I always underline and capitalize internal cross-references. For external cross-references, I do not underline, and I use the convention adopted for the other agreement. For example, if the other agreement uses “Section” to refer to its sections, I use “Section”. If it uses “Paragraph”, I use “Paragraph”. And I of course always reference the other agreement so there is no confusion. Although I haven’t come across this yet, if the other agreement doesn’t specify how its internal cross-referencing works (e.g., it doesn’t have a need to use any internal cross-referencing), I think I would use the word “section” and not capitalize. But I am not sure why I feel that way.
      Finally, even though I work at Microsoft, I feel the need to stay out of an apparent War of [Microsoft] Word between Ken and Chris, at least in the context of this post. I will only say that I am an avid user of Word’s built-in cross-referencing function, so my section cross-references are therefore always capitalized as described by Chris, but even in documents where I wasn’t using the built-in cross-references (usually because switching over in a document that didn’t start out using them makes redlines look severe), I would still use capitals.

  • Krumhorn

    The NVCA document has problems. Do you agree with the “and” in Section 6.1? It seems to me that it should be “or”. Also, it appears to me that there are important provisions, such as the lockup, that should survive the termination. Of course, I suppose that partly depends on what the meaning of “consummation” of the IPO is.

    As to an earlier comment, I believe that it unnecessarily clutters up an agreement to have each heading preceded by the words, Article, Section or Subsection. But that’s just me.