A “Successors and Assigns” Example of Turning Pointless into Wrong

I fished this from the depths of EDGAR:

The highlighted part is a “successors and assigns” provision. Usually they’re pointless; in this 2013 article, I consider seven possible functions of the “successors and assigns” provision and find them all wanting. Here’s what I conclude:

[I]t’s a useless provision that survives because drafters are unsure what function it serves and so are loath to get rid of it. And it’s sufficiently obscure that one can project onto it all sorts of unlikely meanings.

So if you think the “successors and assigns” provision is useful, you have some soul-searching to do.

But wait, there’s more! The above example includes the word representatives, twice. (One instance is given an initial capital, as if it were a defined term, but it’s not defined in the contract.) That’s unorthodox, and it has the potential to create mischief, because contracts bind only the parties—they don’t bind representatives!

The above example is from an employment agreement. Are we to assume that, say, the employee’s lawyer is bound by the contract? The identical language, minus the initial-capital glitch, appears in a material supply agreement between two companies. Are we to assume that company employees are bound by the contract?

All it takes is a bit of improvising to turn pointless into wrong. And if one of the parties takes wrong seriously, it can turn into pernicious.

About the author

Ken Adams is the leading authority on how to say clearly whatever you want to say in a contract. He’s author of A Manual of Style for Contract Drafting, and he offers online and in-person training around the world. He’s also chief content officer of LegalSifter, Inc., a company that combines artificial intelligence and expertise to assist with review of contracts.