It’s time for another installment of your favorite game, Which category of contract language?
Here’s a cleaned-up version of something I just saw in a contract:
The Consultant may rely on the accuracy and completeness of all information provided by the Client.
I suggest that language of discretion doesn’t make sense. Without this provision, would the Client have a remedy if the Consultant were to rely on that information? No—the issue isn’t discretion. Instead, what we’re dealing with here is risk allocation.
So instead of using language of discretion, I would use language of declaration:
The Client states that all information that it provides to the Consultant will be sufficiently accurate and complete to permit the Consultant to provide the Services.
But I’m open to other ideas.
[Updated April 1, 2015: May the drafting gods have mercy on my soul—my language-of-declaration idea is utterly f*ed up, pardon my French. Maybe it would be fine if it were referring to information previously delivered, but it won’t work for information not yet delivered, as it doesn’t make sense to have a statement of fact relating to future information. The only way to handle that would be in an obligation. I will do penance by crawling home from Nashville on my knees.]
I see both versions as in essence half of a conditional sentence:
‘If the information the client provides the consultant is insufficiently accurate and complete to permit the consultant to provide the services….’
To what category of contract language does that belong?
Can’t say till the other shoe drops.
Most likely the matrix clause will be either language of obligation (‘the client shall pay the consultant anyway’) or that odd corner of language of discretion that finds expression in words signifying lack of duty (‘the consultant is not required to provide the services’).
P.S. I am assuming that the contract is between the consultant and the client, and that neither is a nonparty. If one is a nonparty, other rules apply.
We’re back to something we’ve batted back and forth many a time. Inaccurate statements of fact give rise to a remedy. I don’t think it’s feasible to do as you suggest and build the remedy into each statement of fact.
Straw man.
Wherever in the contract you place the consequence of the inaccuracy of an asserted fact, and however many facts one statement of consequence covers, and even if the contract nowhere lays out a consequence of falsity (eg, because one relies on the common law), a declaration of fact in the body of the contract follows the logic that *if the fact is inaccurate, some consequence follows*. Otherwise, why is the fact in the contract?
So every statement of fact in a contract (recitals aside), is explicitly or implicitly part of a condition.
If that’s so, then MSCD already has an answer to the question, ‘to what category does a condition belong?’ The answer is ‘none’.
Switching gears, and in reliance on your saying that you’re open to other ideas, how about these construals:
1/ ‘The consultant is not required to investigate or verify the accuracy and completeness of information the client provides’. (Per MSCD, that’s language of discretion; I would call it language of lack of obligation, a category not yet officially recognized, but tomorrow is another day.)
2/ ‘The client shall provide the consultant with accurate and complete information’. (Language of obligation.)
3/ ‘The consultant shall treat as accurate and complete all information the client provides [and shall make no effort to investigate or verify it]’. (Language of obligation.)
You might has well say that if a party does not comply with an obligation, some consequence follows, so every obligation in a contract is explicitly or implicitly part of a condition. Cannot compute. Must self destruct.
I’ll return to your three alternatives later.
I am still unsure that stating a fact is a meaningful category, in the absence of stating the consequence of the fact being untrue. It could be a promise or an allocation of responsibility. Given how warranties tend to work, I wonder (without at this stage trying to set up a coherent category) whether we are more in the territory of “X is liable for [any][certain] losses incurred by Y if the following statements are not true”.
Issues that the court may consider when determining that liability include:
– is X liable if he did not know or could not have known the statement was not true, or if the matter was outside his control? Should he have any greater responsibility if X has special qualifications or skills and the matter falls within his area of expertise?
– is Y able to recover [all of] his losses if he knew that the statement was not true? Or if he can take steps to minimise the impact of the statement turning out not to be true?
– is the liability measured by reference to X’s wrongdoing in making the statement or Y’s actions in reliance on the statement?
A possible response to these musings is that it shouldn’t matter: the basic category is a neutral statement, and the rest is dealt with separately in the contract.
I am still unsure.
You ought to have a chat with A. Wright Burke! This is a bone he gnaws on; see his comment to this post.
The notion of categories of contract language is a semantics construct, not a legal construct. And that’s for the better, as legal constructs tend to be utterly opaque.
With language of declaration, I’m just stating facts. I want to state as facts only those matters that the party in question is in a position to know something about. Otherwise, I’m dealing with risk allocation, and I’d rather make that explicit, using indemnification, liquidated damages, or some other risk-allocation mechanism.
And I don’t necessarily want to link statements of fact to a remedy. For one thing, once you have more than one or two statements of fact, that becomes unwieldy. Inaccurate statements of fact give rise to standard remedies; you don’t have to keep reminding the reader of that. So unless inaccurate statements of fact give rise to some customized outcome, I don’t bother stating what the consequences are.
Most of the issues you refer to are simply part of the messy business of contract disputes. I’m not about to try micromanaging that in a contract, in advance of a dispute.
I think you would need to be explicit about the party knowing something about the facts he is stating. I don’t think it is obvious from using the word “states”. And how much knowledge is the stater stating that he has?
– for certain
– in my professional judgment
– to my knowledge, with reasonable checking, but not guaranteed
– with my usual careless and uninformed speculation
– I don’t know any reason why not
etc
In other words (in my view) the semantic construct is opaque.
If Acme is stating facts, then unless a knowledge qualifier is included, Acme will liable if those facts are inaccurate.
Knowledge qualifiers are relevant if the topic is such that it wouldn’t be reasonable to expect Acme to know all the facts. MSCD parses knowledge standards at tedious length. But if you’re talking about something that’s within Acme’s control, knowledge qualifiers aren’t relevant.
I don’t see anything opaque about this.
Ken Adams, meet Ken Adams:
(1) ‘With language of declaration, I’m just stating facts.’
(2) ‘If Acme is stating facts, then unless a knowledge qualifier is included, Acme will liable if those facts are inaccurate.’
‘Just stating facts’, like narrative, has no proper place in the body of a contract.
All stated facts in a contract, regardless of declarant, are legally and semantically conditional statements, with the consequence of falsity being explicit or implicit.
I agree there’s nothing opaque about this.
I propose simply the language of obligation:-
“The Client shall provide to the Consultant sufficiently accurate and complete information to permit the Consultant to provide the Services.”
This goes beyond the “language of declaration” version, under which the Client is not obliged to provide any information at all but all information actually provided must be “sufficiently accurate and complete to permit the Consultant to provide the Services”. However, either the Client provides no information at all or provides complete information. There is no scope for the client to provide just some information, because this would not be complete. Clearly, the Consultant could not provide the Services with no information at all. Therefore, the Client must be obliged to provide complete information.
Good point, but I assume that the provision in question supplements other provisions under which the Client is required to provide information to the Consultant. (I hope that doesn’t sound like too much of a cop-out!)
Well, we’ve had every manner of MSCD category used in this discussion except for language of policy, so here goes:
Consultant’s obligation to provide the services is dependent on Client’s provision of accurate and complete information; and Consultant will not be obligated [I’d have said “obliged” but Ken’s allergic to it] to inquire into the accuracy or completeness of any information supplied by Client.
The point here is that in consultancies, or in any professional services context, what is usually involved in the service provider’s interest is a statement of dependencies on things out of its control on which the proper performance of services is contingent, the failure of which will excuse incomplete or unsuccessful performance. Since it’s an issue of allocating liabilities, it struck me that it’s a question of policy rather than of obligation or simple declaration/representation/warranty. If a client’s inaccurate statement could generate actual liabilities on the part of the consultant, then an indemnification would be appropriate.
Ken:
I concur with Vance’s third paragraph (of observations), but would use the original language of discretion, because language of discretion is a consensual grant of permission by one party to the other. That seems adequate to me to cover the scenario that is at issue, at least as further explained by Vance. I have sometimes seen a further explanation of how the Consultant won’t be responsible for various consequences if that reliance is misplaced, which more that edges into Vance’s language.
Chris
Regarding the first part of your language, is it necessary? Even without it, couldn’t the consultant refuse to provide services if the client provides inaccurate information?
And regarding the second part, it’s equivalent to A. Wright Burke’s first example below, so for the reason stated in my reply to Wright, I don’t think it works.
I think that it depends upon what the Consultant is trying to achieve here.
1) If the Consultant is trying to say to the Client, “I’m provding the Services based upon the info that you give me so don’t come crying to me if you provide me bad info and I then provide bad Services,” then I think an acknowledgment by the Client to this effect works (i.e., the Client acknowledges that the Consultant is rendering the Services based, in part, upon info provided by the Client), coupled with language of policy that provides that the Consultant will not be liable for Services rendered to the Client that are based upon “bad info.”
2) If, on the other hand or in addition, the Consultant wants to be able to have a claim against the Client for bad info provided by the Client (e.g., if the Consultant is concerned about rendering Services or taking other action based upon info provided by the Client and then getting sued by a third party because of those actions), then I think an obligation of the Client is appropriate (“Client shall provide complete and accruate info…”), as well as perhaps an indemnification obligation on the Client.
3) If, on the other other hand or in addition, the Consultant wants to ensure that info previously provided by the Client is complete and accurate, then a representation and warranty to that effect from the Consultant would be appropriate (and so long as we are not spelling out the in the contract the remedies available to the Consultant for any inaccuracy, I’ll try to phrase this as both a rep and warranty).
4) I’ve posted on this site and elsewhere my trouble with language of discretion in this sort of context. If I am the Consultant, the Client doesn’t need to “permit” me to rely on information. I can choose to do so or not do so as I see fit…unless I am expressly or impliedly prohibited from doing so by contract or by law.
-Vinny
As noted in my update, I’m going with language of obligation. I don’t think you need in addition the language in your first paragraph. Regarding your third paragraph, that’s some sort of April Fool thing, right?