In MSCD, as well as in this 2007 post, I say that the phrase during the term of this agreement is usually redundant. I use the following example:
During the term of this agreement, the[The] Company shall pay Jones an automobile expense allowance of $1,000 per month, grossed up for income tax purposes, and reimburse Jones for all gasoline and maintenance expenses incurred by him in operating his automobile.
But when the phrase is redundant, it’s also potentially misleading. In using the phrase in this context, the drafter presumably intends to express the meaning “while this agreement is in effect.” But if the contract has a stated duration—invariably expressed using the word term—the phrase could be understood as applying for the entirety of that stated duration, even after the contract is terminated before the end of the stated duration.
Redundant and misleading—not a good combination.
3 thoughts on “A Further Note on “During the Term of This Agreement””
Collins says the word ‘term’ evolved from referring to a terminal *point* (or boundary) to referring to a *period* with an endpoint.
A drafter has to decide whether to use the word ‘term’ or another formulation for one or more of following periods:
(1) The period from signing to early termination;
(2) The period from signing to non-early termination;
(3) The period from early termination to what would have been termination but for early termination;
(4) The first ‘full’ period during which the contract is in effect;
(5) Renewal periods (some drafters speak of renewal ‘terms’, others make ‘term’ include renewal periods);
(6) The period from early or non-early ‘termination’ to the expiration point, if any, of post-‘termination’ obligations (eg confidentiality or non-competition).
I should have used inverted commas around ‘termination’ throughout to express my reservations about the sensibleness of nomenclature that speaks of *contractual* obligations (eg confidentiality) that survive the *termination* (end?) of the contract that creates them.
One could argue that the ‘term’ of a contract is the period during which any contractual obligations exist. If a drafter uses ‘term’ for a lesser period, the drafter must use another term for the overall obligation period, if that longer period needs mention.
The point is not which labels are best, but for drafters to watch for the kinds of periods that apply to the deal at hand, and draft in that light.
On the other hand, it’s often necessary to include that lead-in when the paragraph in question survives termination of the agreement. Without the lead-in, the payment obligation would continue in perpetuity even after the agreement expired if the paragraph were one that survived termination.
Sure, check out the 2007 post that I link to.